UNIVERSITY  or  CAl  If  ORNIA    SAN  DIEGO 


3  1822  00594  3477 


ERSITY  OF  CALIFORNIA    SAN  UIE(,0 


3  1822  00594  3477 


Central  University  Library 

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CI  39  (1/90) 


MANUAL 


OF 


THE  SHERMAN  LAW 


A    DIGEST   OF   THE    LAW   UNDER   THE 
FEDERAL  ANTI-TRUST  ACTS 


BY 
EVERETT  N.  CURTIS,  S.  B.,  LL.B. 


OF  THE   BOSTON   BAR 


NEW   YORK 

BAKER,  VOORHIS  &  CO. 
1915 


Copyright,  1915 
By  EVERETT  N.  CURTIS 


TO  THE 

'  HONORABLE  LE  BARON  B.  COLT 

For  many  years  Judge  of  the  Circuit  Court  of  the 
United  States  for  the  First  Circuit  and  now  Senator  of 
the  United  States  from  the  State  of  Rhode  Island 

Whose  profound  knowledge  of  the  law,  strict  adher- 
ence to  the  highest  ideals  of  the  bench  and  the  admin- 
istration of  justice,  and  uniform  consideration  and 
courtesy  to  the  profession  during  his  long  term  of 
faithful  and  honorable  service  in  this  circuit  were  and 
are  greatly  appreciated 

This  Volume  is  Respectfully 
Dedicated. 


PREFACE 

The  primary  purpose  of  this  handl)ook  is  to  furnish 
practitioners  with  a  ready  means  of  finding  pertinent 
judicial  authority  or  expression  of  opinion  upon  points  of 
law  under  the  federal  anti-trust  acts  which  are  constantly 
arising  in  active  practice.  In  these  modern  and  busy 
times,  the  opinion  of  any  text  writer  apart  from  his  au- 
thorities is  of  but  little  value  to  the  trial  lawyer,  whose 
needs  are  based  not  upon  what  the  law  theoretically 
ought  to  be  but  so  far  as  possible  upon  what  the  law  actu- 
ally is.  Accordingly,  in  these  pages,  the  precise  language 
of  the  decisions  has  been  followed  except  where  prolixit}^ 
or  constant  repetition  of  the  legal  principle  rendered  con- 
densation necessary  or  desirable. 

Undoubtedly  there  has  been  some  conflict  of  authorit}' 
both  on  account  of  the  importance  and  elusive  character 
of  the  subject,  and  on  account  of  the  fact  that  the  princi- 
ples underlying  the  law  are  still  in  a  state  of  growth.  It 
is  surprising,  however,  that  there  has  not  been  more  con- 
fusion and  that  there  has  been  so  great  uniformity  of  de- 
cision as  to  the  facts  constituting  offenses  forbidden  by 
the  Law. 

While  there  is  a  difference  of  opinion  as  to  the  ultimate 
effect  or  scope  of  the  Standard  Oil  Co.  and  American  To- 
bacco Co.  decisions,  the  legal  situation  is  certainly  clarified 
to  the  extent  of  indicating  the  policy  of  the  Supreme  Court 
so  to  interpret  the  Act  as  to  repress  the  evil  that  it  was 
designed  to  reach  and  to  apply  the  remedy  without  regard 


vi  Preface 

to  disguise  or  subterfuge  of  form;  the  purpose  of  the  Act 
as  now  announced  being  to  reach  only  such  restraints  or 
monopolistic  methods  as  are  unduly  obstructive  to  the 
movement  of  trade  in  the  channels  of  interstate  or  foreign 
commerce,  or  unduly  or  unreasonably  restrictive  of  com- 
petitive conditions. 

Furthermore,  the  amendatory  or  supplementar}^  provi- 
sions of  the  Clayton  Act  have  modified  or  extended  in  im- 
portant particulars  the  interpretation  of  the  provisions  of 
the  Sherman  Law.  The  provisions  of  the  recent  act 
creating  a  Federal  Trade  Commission,  particularly  those 
relating  to  the  enforcement  of  certain  provisions  of  the 
anti-trust  laws  and  the  prevention  of  unfair  methods  of 
competition  in  interstate  and  foreign  commerce,  are  also 
important  in  this  connection.  Such  provisions  and  their 
effect  upon  the  law  have  been  carefully  noted  in  these 
pages  where  pertinent  in  order  that  so  far  as  possible  this 
manual  could  be  brought  down  to  date;  and  the  full  text 
of  the  anti-trust  laws  and  the  Federal  Trade  Commission 
Act  is  given  in  the  ajipendix. 

EVERETT  N.  CURTIS. 
Boston,  Massachusetts, 
February,  1915. 


TABLE  OF  CONTENTS 

CHAPTER  I 

PAGE 

Monopolies  and  Restraints  of  Trade  at  Common  Law..  1-9 

Section      1 .  Monopoly  by  Royal  Grant 1 

2.  Monopolistic  Grants  in  Time  of  Elizabeth ...  2 

3.  Prohibition  of   Monopolies  Granted  by  the 

Crown 2 

4.  Evils  of  Monopolistic  Grants 3 

5.  Statutes  against  Forestalling,  Regrating  and 

Engrossing 3 

6.  Term  Monopoly  to  be  Applied  to  Result ....  3 

7.  State  Constitution  and  Statutes 4 

8.  Unobstructed  Course  of  Trade 4 

9.  Objection  to  Voluntary  Restraints 4 

10.  Unreasonableness  of  Restraint  of  Trade 5 

11.  Partial  Restraint  Generally  Valid 5 

12.  Contract  in  Restraint  Illegal  Because  Unen- 

forceable    6 

13.  Mogul  Steamship  Company  Case 6 

14.  Restraint  Lawful  if  Ancillary  in  Character. ...  7 

15.  Restraints  of  Contracting  Parties  and  Third 

Persons 8 

16.  Combinations  Constituting  a  Public  Wrong. .  .  8 

17.  Restraint  as  Affecting  Value  of  Matter  Sold ...  9 

18.  Restraint  Cannot  Run  with  the  Article  Sold. .  .  9 

CHAPTER  II 

Congress  and  its  Relation  to  the  Act 10-17 

Section    19.  Course  of  the  Act  through  Congress 10 

20.  Power  of  Congress  to  Enact  Statute 10 

21.  Power  is  Complete  in  Itself 11 

vii 


viii  Table  of  Contents 

PAGE 

Section    22.  Power  to  Regulate  Commerce  ia  Plenary ....  11 

23.  Congress  has  Plenary  Power  to  Restrict  Every 

Instrumentality 12 

24.  Combination  of  Powerful  Corporations 12 

25.  Combination  of  Railroads  to  Establish  Rates. .  12 

26.  Congress  Cannot  Regulate  Intrastate  Com- 

merce   13 

27.  A  State  Cannot  Obstruct    Interstate   Com- 

merce    13 

28.  No  Corporation  can  Restrain  Interstate  Com- 

merce by  State  Authority 13 

29.  Constitutionality  of  State  Enactment 14 

30.  Power  of  Congress  not  Unlimited 15 

31.  Private  Contracts  not  Excluded 15 

32.  Contracts  Extinguishing  Competition 15 

33.  Right  of  Contract  Subordinate  to  Law 16 

34.  Constitutional  Right  of  Contract  Limited  by 

Commerce  Clause 16 

35.  Legitimate  Regulation  of  Contracts 16 

CHAPTER  III 

Meaning  of  the  Words  "Interstate  Commerce"  or  Com- 
merce AND  Trade  Amonu  the  Several 

States 18-34 

Section    30.  Act  InckKles  Both  Trade  and  Conmierce.  ...  18 

37.  Interstate  or  Foreign  Commerce  nuist  be  In- 

volved    18 

38.  Interstate  Commerce  Defined 18 

39.  Meaning  of  Commerce  as  usctl  in  the  Clayton 

Act 19 

40.  Trade  Defined 20 

41.  Scope  of  Interstate  Trade  and  Commerce 20 

42.  Purchase,  Sale  and  Transportation  of  Com- 

1                                      modities 21 

43.  Commerciial  Intercourse 21 

44.  Navigation 21 

45.  Towing  Tugs  Subject  to  Act 22 

46.  Entii'ety  in  two  or  more  States 22 

47.  What  may  be  Regulated 22 


Table  of  Contents  ix 

PAGE 

Section    48.  Not  a  Technical  But  a  Practical  Conception .  22 

49.  Foreign  Commerce 23 

50.  Passengers  Between  United  States  and  Abroad  23 

51.  Negotiation  and  Solicitation  of  Orders 24 

52.  Solicitors  of  Commission  Merchants 25 

53.  Manufacturing  is  not  Commerce 26 

54.  Production    of    Manufactured    Articles    and 

Preparation  for  Transportation 27 

55.  Mere  Intent  of  Manufacturer 27 

56.  Delivery  within  for  Transportation  without  a 

Single  State 28 

57.  Combination  Restraining  both  Manufacture 

and  Sale 28 

58.  Commerce  Partly  Intrastate  and  Partly  Inter- 

state    29 

59.  Act  does  not  Apply  to  Intrastate  Commerce .  .  29 

60.  Congress  has  no  Authority  over  Articles  out- 

side of  Stream  of  Interstate  Commerce .  .  29 

61.  Indirect  External  Effect  of  Enterprises  wholly 

within  State 30 

62.  Stock  Exchanges 31 

63.  Charges  for  FaciUties  Furnished 31 

64.  Commission  Merchants  or  Agents 32 

65.  State  Line  Through  Stock  Yards 32 

66.  Indirect  State  Legislation 32 

67.  Not  Necessary  for  Title  to  Pass 33 

68.  Leased  Machinery 33 

69.  After  Termination  of  Transportation 33 

70.  Immaterial  that  Transported  Article  is  Taxed 

in  Place  of  Manufacture 34 

71.  Single  Shipment 34 

CHAPTER  IV 

Railroad  Transportation 35-43 

Section    72.  Act  Applies  to  Interstate  Railroads 35 

73.  Contracts  in  Restraint  between  Competing 

Railroads 36 

74.  Distinction  between  Railroad  and  Other  Cor- 

porations    36 


X  Table  or  Contents 

PAGE 

Section    75.  Distinction  between  Private  Individual  and 

Railroads 36 

76.  Correction  of  Evils  Common  to  both  Railroads 

and  Individuals 37 

77.  Public  Entitled  to  Free  Competition  between 

Railroads 37 

78.  Prevention  of  Transportation 38 

79.  Consolidation    by    Transfer    of    Dominating 

Stock  Interest 39 

80.  Single  Dominating  Control  in  One  Corpora- 

tion    40 

81.  Acquisition  of  P^ntire  System  of  Competitor. .  .  40 

82.  Use  of  Auxiliary  Lines 41 

83.  Combination  Compelling  Use  of  Single  Ter- 

minal       41 

84.  Competition  may  be  by  Character  of  Service 

Rendered 41 

85.  Comparative    Insignificance   of    Competition 

Substantial  in  Amount 41 

86.  No  Right  to  Combine  to  Maintain  Reasonable 

Rates 42 

87.  Redress  from  Unreasonable  Rates  not  Limited 

to  Interstate  Commerce  Commission. ...     42 

CHAPTER  V 

Labor  Organizations 44-52 

Section    88.  Effect  of  Clayton  Act  upon  Labor  Organiza- 
tions       44 

89.  Peaceful  Termination  of  Emplnyment,  etc. ...      45 

90.  Acts  of  Viol(>ncc  or  Coercion  by  Laborers  or 

Capitalists 46 

91.  Organizations  of  Farmers  or  Laborers 47 

92.  Compelling  Employment  of  none  but  Union 

:  Men 47 

93.  No  Right  to  Prevent  Employment  of  Other 

Mechanics 47 

94.  Wanton  Injury  to  Property  of  Employer.  ...  48 

95.  Agreement  not  to  Work  in  Non-Union  Shop.  48 

96.  Einf)loyces  of  Railroad  Companies 49 


Table  of  Contents  xi 

PAGE 

Section   97.  Arresting  Operation  of  Railroad 49 

98.  Restrictive  Rule  of  Association  of  Locomotive 

Engineers 49 

99.  Equal  Protection  to  Labor  and  Capital 50 

100.  Lawful    and    Peaceable    Methods,    Right    to 

Strike  Peaceably 50 

lOL  Right  to  Strike  Peaceably 50 

102.  Ceasing  to  Work  at  Will  of  Union 51 

103.  Presumption  of  Employment  of  only  Lawful 

Methods 51 

104.  Enjoining  from  Quitting  Service 51 

105.  Resort  to  Coercion,  etc 52 

106.  Black  Listing  by  Labor  Unions 52 

CHAPTER  VI 

General  Construction  OF  THE  Enumerated  Offenses 53-73 

Section  107.  Growing  Liberality  of  Construction 53 

108.  First  Section  (Restraint  of  Trade) 54 

109.  Second  Section  (Monopoly) 54 

110.  Modes  of  Giving  Effect  to  the  Law 54 

111.  Constitutionality 55 

112.  Primary  Object  of  Statute 55 

113.  Fear  of  Powerful  Combinations 55 

114.  Power  of  Congress  Exclusive 56 

115.  Public  Welfare  the  First  Consideration 56 

116.  Whole  Statute  nmst  be  Taken  Together 56 

117.  Historical  Environment 57 

118.  Debates  in  Congress 57 

119.  Necessary  Restriction  of  Meaning  of  General 

Words 58 

120.  Intent  of  Statute 58 

121.  Literal  Construction  of  Statute 58 

122.  General  Expressions  in  Legal  Decisions 59 

123.  Lateness  of  Enactment 59 

124.  Statute  Covers  all  Illegal  Means  for  Restrain- 

ing Interstate  Commerce 59 

125.  Undue  Restraint  of  Competition  or  Trade ....  60 

126.  Unreasonably  Restrictive  of  Competitive  Con- 

ditions    61 


xii  Table  of  Contents 

PAGE 

Section  127.  Restraint  of  Compptition 61 

128.  Suppression  of  Competition 62 

129.  Act  is  Broader  than  the  Common  Law 62 

130.  Abatement  of  Evil  and  Application  of  Remedy  63 

131.  Generic  Enumeration  of  Offenses  in  Act 63 

132.  Free  Flow  of  Commerce  Must  not  be  Impeded  64 

133.  All  Circumstances  Taken  into  Account 65 

134.  Effect  upon  both  Consumers  and  Competitors  65 

135.  Legitimate  Competition  not  Forbidden 65 

136.  Personal    Right   to    Fix    Price    and   Dictate 

Terms 66 

137.  One  Person  may  make  Exclusive  Sales  of  his 

Own  Merchandise 66 

138.  Lawful  Combination  Turned  to  Unlawful  Pur- 

poses    67 

139.  Control  of  Rates  and  Prices 67 

140.  Reasonable  Construction  of  Statute 68 

141.  Standard  of  Reason  at  Common  Law 68 

142.  Test  of  Reasonable  Restraint 69 

143.  Materiality  of  Question  of  Reasonable  or  Un- 

reasonable Restraint 70 

144.  The  Rule  of  Reason 70 

145.  Scope  of  First  and  Second  Sections  Taken  To- 

gether   71 

146.  Subject-Matter  of  First  and  Second  Sections .  71 

147.  The  Two  Sections  not  Identical  in  Scope 71 

148.  Second  Section  Broader  than  First 72 

149.  Second  Section  Supplementary  to  the  First.  .  72 

150.  Second  Section  Includes  more  than  Restraints 

of  Trade  at  Common  Law 73 

CHAPTER  VII 

JcTDiciAL  Interpretation  of  "Restraint  of  Trade"  Under 

THE  Act 74-87 

Section  151.  Meaning  of  "Restraint  of  Trade" 74 

152.  Breadth  of  Meaning  Given  to  Words  "Re- 

straint of  Trade" 74 

153.  Construction  Controlled  by  Title  of  Act 75 

154.  No  AflBrraative  Relief  at  Common  Law 75 


Table  of  Contents  xiii 

PAGE 

Section  155.  "Restraint  of  Trade"  to  be  Given  Common 

Law  Meaning 76 

156.  Statutes  Changing  Common  Law  Rules 78 

157.  Conspiracy  in  Restraint  of  Trade  not  Limited 

to  Contracts  and  Combinations  Illegal  at 

Common  Law 78 

158.  Scope  of   "Restraint  of   Trade"  Under  the 

Act 78 

159.  Actual  Restraint  not  Prohibited 79 

160.  General  Restraint  of  Trade 79 

161.  Voluntary  and  Involuntary  Restraints 79 

162.  All  Forms  of  Combination   in  Restraint  of 

Trade  are  Embraced 80 

163.  Reasonable    Construction    Excludes    Normal 

and  Usual  Contracts,  Incidental  to  Lawful 

Purposes 80 

164.  Test  Whether  Unusual  or  Wrongful 81 

165.  Where  Sole  Purpose  is  Destruction  of  Com- 

petition    81 

166.  Combination  Formed  Abroad 81 

167.  Direct  or  Indirect  Effect 82 

168.  Direct  and  Immediate  Effect 82 

169.  Incidental  or  Indirect  Effect 83 

170.  Necessary  Construction  of  Contract 85 

171.  Necessary  Operation  or  Effect 85 

CHAPTER  VIII 

Contracts  in  Restraint  of  Trade 88-95 

Section  172.  Restraints  on  General  Right  of  Alienation ....  88 

173.  General  Right  to  Fix  Terms  of  Sale 88 

174.  Preventing  Play  of  Natural  Competition 88 

175.  Where  Restraint  is  Insignificant 89 

176.  Conventional   Restraint  of   Trade  must   Be 

Ancillary 89 

177.  Promotion  of  Legitimate  Business 89 

178.  Sale  with  Covenant  not  to  Compete 90 

179.  Contract  Restriction  Must  not  be  too  Broad .  .  90 

180.  Restraint  Must  be  Confined  Within  Proper 

Bounds 91 


xiv  Table  of  Contents 

PAGE 

Section  181.  Mere  Purchase  or  Sale  with  Incidental  Re- 
straint       91 

182.  Protection  of  Good  Will 92 

183.  Non-Competing    Covenant    When    Ordinary 

Incident 92 

184.  Text  of  Contract  with  Covenant  not  to  Com- 

pete       92 

185.  Contract    Made   by   Combination    in    Usual 

Course  of  Business 93 

186.  Agreements  not  to  Bid 93 

187.  Use  of  Guarded  Language  Covering  Real  Pur- 

pose       93 

188.  Restriction  not  to  Ship  out  of  State 94 

189.  Contracts  Valid  when  Made,  Continue  to  be 

Valid 94 

190.  Legality  Under  State  Law 94 

191.  Where  Seller  no  Longer  Retains  Interest 94 

192.  Mere  Change  of  Form  of  Investment 95 

193.  Contract  Partly  Written  and  Partly  Parol.  .  .  95 

CHAPTER  IX 

(Conspiracy 96-102 

Section  194.  Conspiracy  Defined 96 

195.  Common  Design  in  Essence  of  Conspiracy. .  .  96 

196.  Overt  .\ct  not  Necessary 97 

197.  Distinguished  from  Contract 97 

198.  Continuance  in  Time 97 

199.  A  Conspiracy  may  have  Continuance  in  Time. 

Time  not  Essence  of  Conspiracy 98 

200.  Two  or  More  Persons 98 

201.  Act  of  One  is  Act  of  All 99 

202.  Aiding  in  Performance 99 

203.  Joining  After  Formation  of  Conspiracy 99 

204.  Corporation  can  Conspire 100 

205.  Not  to  be  Judged  by  Legality  of  Dismembered 

Parts 100 

206.  Conspirators  not  All  Traders 100 

207.  Conspiracy  to  Run  a  Corner 100 

208.  Circumstantial  Evidence 101 

209.  Order  of  Proof 101 


Table  oi''  Contents  xv 
CHAPTER  X 

PAGE 

Combinations 103-121 

Section  210.  Meaning  of  Combination 103 

211.  Combination  in  the  Form  of  Trust 103 

212.  Trust  Defined 103 

213.  Form  of  Combination  is  Immaterial 104 

214.  Two  or  more  Persons  Necessary  to  Create 

Combinations 104 

215.  Later  Members  of  Combination 105 

216.  Where  Combination  Ante-Dated  Corporation  105 

217.  Continuing  Offense  Under  the  Act 105 

218.  Combination  Wholly  Within  State 106 

219.  Combination  Formed  Abroad 106 

220.  Combination  Operating  Abroad  Solely 107 

221.  Combination  Operating  Only  in  Part  Within 

United  States 107 

222.  Combination  Solely  for  Greater  Efficiency .  .  .  107 

223.  Blacklisting  of  Competitors 108 

224.  Illegal    Combination    Each    Part    of    Which 

Taken  Alone  is  Lawful 108 

225.  Control  of  Resale  Prices 108 

226.  Power  to  Fix  Prices  Placed  by  Competitors  in 

Single  Control 109 

227.  Sole  Purpose  to  Destroy  Competition  and  to 

Fix  Prices 109 

228.  Presumption  of  Illegitimate  Purpose 110 

229.  Total  Suppression  of  Trade  Unnecessary 110 

230.  Combination     Need     not     Effect    Complete 

Monopoly Ill 

231.  Unusual  and  Abnormal  Methods Ill 

232.  Innocent  Purchaser  of  Commodity  of  Com- 

bination    112 

233.  Sale  by  Combination  to  Party  Thereto 112 

234.  One  may  do  what  Many  Cannot 112 

235.  Voluntary  Withdrawal 113 

236.  Inability  of  Competitors  to  Supply  Market  no 

Excuse 113 

237.  Reduction  of  Prices  for  Time  Being  no  Excuse  113 

238.  Improvement  of  Service 114 


xvi  Table  of  Contents 

PAGE 

Section  239.  Protection  of  Parties  and  Reasonahlr  Prices  115 

240.  Continued  Purchases  by  Public  at  Enhanced 

Price  no  Excuse 1 15 

241.  Live  Stock  Exchange 116 

242.  Increase  of  Profits  and  Prevention  of  Com- 

petition      116 

243.  Hardship  Resulting  from  Natural  Industrial 

Changes 117 

244.  But  Such  Changes  Must  not  be  Brought  about 

Artificially 117 

245.  Eflfect  of  Fixing  Prices 118 

246.  Manufacturer's  Agreement  to  Fix  Price  and 

not  to  Sell  to  Purchasers  of  Competitors  118 

247.  Private  Manufacturers 119 

248.  Where  Part  of  Combination  are  Manufacturers 

Only 119 

249.  Mere  Control  by  Stock  Ownership 119 

250.  Control  of  Stock  Resulting  in  Direct  Restraint  120 

251.  Holding  Company 120 

252.  Dominating  Control  Extinguishing  Competi- 

tion      121 

253.  Dominating  Though  not  Majority  Stock  In- 

terest     121 

254.  Official  Proclamations  and  Newspaper  Reports  121 

CHAPTER  XI 

Monopoly  and  Attempted  Monopoly  Under  the  Act.  .  . .  122-142 
Section  255.  Modern  Doctrine  of  Monopoly 122 

256.  Scope    of    "Monopolize"    or    "Attempt    to 

Monopolize" 122 

257.  Monopoly  and  Attempt  to  Monopolize 123 

258.  Creation  of  Monopoly 123 

259.  Attempt  to  Monopolize  Defined 124 

260.  Exclusion  of  Others  from  Competition 124 

261.  Two  Leading  Elements 124 

262.  Aggregation  or  Concentration  to  the  Exclusion 

of  Others 125 

263.  Monopoly  of  "Any  Part" 125 

264.  Monopoly  in  Any  Form 125 


Table  of  Contents  xvii 

PAGE 

Section  265.  Monopoly  by  Any  Person 126 

266.  Welding  Together  of  Competing  Corporations  126 

267.  All  Attempts  to  Restrain  Trade  are  Embraced  127 

268.  Distinction  Between  Attempt  and  Preparation  127 

269.  Direct  or  Indirect  Effect 127 

270.  Not  Restricted  to  Necessaries  of  Life 128 

271.  Rule  of  Reason 128 

272.  Magnitude  of  Business 128 

273.  Monopoly  Need  not  be  Complete 128 

274.  Necessary  Tendency  is  Sufficient 129 

275.  No  Defense  that  Trade  is  Uninjured 129 

276.  Acquirement  of  Potential  Power 130 

277.  Plan  of  Monopoly  may  make  Parts  Unlawful    130 

278.  Manufacturing  Monopoly  Within  a  State. ...    131 

279.  Power  of  State  Legislature 132 

280.  Predictions  of  Ruin 132 

281.  Natural  Effect  of  Competition 132 

282.  Normal  Competition  the  Law  of  Trade 133 

283.  That  Monopoly  is  Beneficial  to  Public  is  no 

Excuse 134 

284.  Balancing  of  Evils  or  Benefits  of  Monopoly 

and  Competition 134 

285.  Fixing  of  Reasonable  Prices 135 

286.  Suppression  of  Unrea.sonable  Competition ....  135 

287.  Scheme  of  Monopoly 135 

288.  Vastness  of  Scheme 136 

289.  Part  of  Unlawful  Plan 136 

290.  Even    Competitive    Practices    may    Become 

Abnormal  and  Unlawful 137 

291.  Lease  in  Pursuance  of  Monopoly 137 

292.  Monopoly  by  Lessors  or  Vendors 137 

293.  Scheme  of  Monopoly  by  Uniform  Contracts. .  138 

294.  Effect  of  such  Contracts 138 

295.  Illegal   Contract   System   of  Contracts   Sep- 

arately' I>awful 140 

296.  Evil  of  Unification 140 

297.  Sole  Object  to  Effect  Monopoly 141 

298.  Promise  of  Rebate  for  Exclusive  Trading.  ...    141 

299.  Contracts  for  Imparting  Confidential  Coiiunu- 

nications 142 


xviii  Table  of  Contents 

CHAPTER  XII 

PAGE 

Intent 143-150 

Section  300.  General  Allegation 143 

301.  Guilty  Knowledge 143 

302.  When  Intent  is  Essential 143 

303.  Where  There  is  only  a  Probability 143 

304.  Coexistence  of  Intent  and  Dangerous  Prob- 

ability    144 

305.  Doubtful  Cases 145 

306.  When  Purpose  or  Motive  is  Immaterial 145 

307.  Intent    not    Necessary    where    Restraint    or 

Monopoly  is  the  Necessary  Result 146 

308.  Where  Result  is  Inconceivable 148 

309.  Acts  made  Collectively  Offensive  by  Intent.  .    148 

310.  Presumption  that  Monoix)listic  Power  will  be 

Exercised 148 

311.  Good  Motives 149 

312.  No  Willful  Purpose 149 

313.  Intention  to  Benefit  Public 149 

314.  Intention  to  Aid  the  Financially  Weak 150 

315.  Ignorance  no  Excuse 150 

CHAPTER  XIII 

Int)ictment.s  Under  the  Act 151-165 

Section  316.  Constitutionality 151 

317.  Proceedings  Before  Cirand  Jury 151 

318.  Allegations  under  First  Section 152 

319.  Allegations  under  Second  Section 152 

320.  Reference  to  Other  Counts 152 

321.  Must  Appear  that  Restraint  is  Undue  or  Un- 

reasonable    153 

322.  No  Right  to  Unrestricted  Competition 153 

323.  Doubtful  Grounds  of  Demurrer 153 

324.  Defects  of  Form 154 

325.  Words  of  Statute 154 

326.  Combination  of  Act  and  Intent 155 

327.  General  Purpose.     Violence  and  Intimidation  155 

328.  Fact.s  Constituting  Offense  nmst  be  Set  Forth  156 


Table  of  Contents  xix 

PAGE 

Section  329.  Defendant  to  be  Notified  with  Certainty  of 

Charge 156 

330.  Mere  Allegation  of  lllegaUty 157 

331.  All  Necessary  Facts  must  be  Charged 157 

332.  Result  of  Omitting  Essential  Elements 158 

333.  Allegation  of  Means 158 

334.  Not  Necessary  to  Prove  every  Means  Alleged  158 

335.  Overt  Act 159 

336.  Allegation  of  Time 159 

337.  Pleadings  of  Numerous  Documents 159 

338.  Duplicity 159 

339.  Label  of  Offense 160 

340.  Different  Counts  on  Same  Facts 160 

341.  Allegations  of  Monopoly 160 

342.  Successful  Results 161 

343.  Active  Parties  Principal 161 

344.  Monopoly  by  One  Person  Only 161 

345.  Conspiracy  or  Combination.    One  Party  De- 

fendant    161 

346.  Other  Offenses  Indirectly  Connected 162 

347.  Summons  to  Defendants  Outside  of  District.  .  162 

348.  Corporation  Party  to  Conspiracy 162 

349.  Corporation  and  Stockholders 163 

350.  Officers  of  a  Corporation 163 

351.  Instruction  of  Verdict 163 

352.  Construction  of  Indictment  on  Appeal 164 

353.  Removal  of  Citizen  to  Another  Federal  Dis- 

trict      164 

CHAPTER  XIV 

Equitable  Proceedings  Under  Section  Four  and  Under 

General  Equity  Jurisdiction.  .  .  .166-185 

Section  354.  Petition  under  Anti-Trust  Laws 166 

355.  Circuit  Court  Succeeded  by  District  Court. .  .  166 

356.  Non-Resident  Defendants 167 

357.  Where  to  be  Instituted 167 

358.  Case  to  be  of  Equitable  Cognizance 168 

359.  Construction  of  Bill  in  Equity 168 

360.  Enjoining  Threatened  Crimea 168 


XX  Table  of  Contents 

PAGE 

Section  361.  Necessity    of    Alleging    Irreparable    Injury. 

Giving  of  Security 169 

362.  Injunction  not  Void  if  Bill  contains  Technical 

Defect 170 

363.  Bill    Need  not   State   Statutory  Amount  in 

Controversy 170 

364.  Association  of  Numerous  Offenders 170 

365.  Undecided  Suits  as  a  Cause  of  Action 171 

366.  Proper    Officers    of    Government    to    Bring 

Bill 171 

367.  Private  Person  may  now  sue  for  Injunctive 

Relief  Except  in  Cases  Against  Common 
Carriers 172 

368.  Statute  of  Limitations  in  Private  Cases 173 

369.  Effect  of  Final  Judgment  or  Decree  in  Govern- 

ment Proceedings  upon  Private  Suits ....    173 

370.  Private  Person  may  also  Invoke  General  Eq- 

uity Jurisdiction 173 

371.  Minority  Stockholder 175 

372.  Bill  Seeking  Injunction  and  Treble  Damages.  .    176 

373.  Preliminary  Injunction  or  Restraining  Order 

Without  Notice 177 

374.  Relief  Determined  by  Status  at  Date  of  Bill.  .   178 

375.  Voluntary  Dissolution  does  not  Oust  Juristlic- 

tion 178 

376.  Court  may  Forbid  Further  Interference  with 

Competition 179 

377.  Proper  Measure  of  Relief 179 

378.  Case  may  Stand  on  its  own  Facts 180 

379.  Remedying  Results  from  Purely  .Vdministra- 

tive  Conditions 180 

380.  Where  Result  is  from  both  Monopoly  and  Con- 

tinued Attempted  Monopoly 180 

381.  Injunction  Preferable  to  13i.ssolution 181 

382.  Prohibition  Should  not  Extend  to  all  Possible 

Violations 181 

383.  Injunction  Against  Unknown  Defendants.  .  .  181 

384.  On  Whom  Injunction  is  Binding 182 

385.  Injunctions  Relative  to  Employees  and  Dis- 

putes Concerning  Employment 182 


Table  of  Contents  xxi 

PAGE 

Section  386.  Injunctions  Relative  to  Termination  of  Em- 
ployment, etc 182 

387.  Injunction  Issued  by  Court  Without  Jurisdic- 

tion      183 

388.  No  Rule  Requiring  Civil  to  Await  Criminal 

Action 183 

389.  Expediting  Certificate 184 

390.  Single  Justice  may  Enter  Decree  on  Mandate  184 

391.  Appeal  in  Government  Suit  Lies  only  to  Su- 

preme Court 185 

CHAPTER  XV 

Action  at  Law  Under  Anti-Trust  Laws 186-218 

Section  392.  Statutory  Provisions 186 

393.  Constitutionality 186 

394.  State  Practice  and  Pleading 186 

395.  Limitation  of  Actions 187 

396.  Fictitious  Action 187 

397.  Averments  of  Jurisdiction 188 

398.  "Where  Defendant  ...  is  Found" 188 

399.  In  Business  Within  the  District 188 

400.  Defendants  may  be  Sued  Separately 189 

401.  One  Defendant  Itself  a  Combination 189 

402.  Corporation  Cannot  Escape  because  Sole  De- 

fendant   190 

403.  Single  Defendant  Under  Section  Two 190 

404.  Cases  Against  Single  Defendant 190 

405.  Stockholder  Cannot  sue  for  Injuries  Sustained 

by  His  Company 190 

406.  Sovereign  State  Cannot  be  a  Party 191 

407.  Defendants  Need  not  Necessarily  be  Engaged 

in  Interstate  Commerce 191 

408.  Not  Essential  that  Plaintiff  be  Engaged  in  In- 

terstate Commerce 192 

409.  Right  of  Receiver  to  Sue 192 

410.  Section  Seven  Declaratory  of  Common  Law 

Right  of  Action 192 

411.  Action  not  Penal  but  Remedial 193 

412.  Cause  of  Action  complete  at  Date  of  Suit ....    193 


xxii  Table  of  Contents 

PAGE 

Section  413.  Words  of  Statute 194 

414.  Action  Need  not  be  Labelled 194 

415.  Satisfaction  of  Defendant 194 

416.  Reasonable  Certainty 195 

417.  Scope  of  Plaintiff's  Allegations 195 

418.  Vagueness  and  Uncertainty 196 

419.  Repression    of    Evil    and    Advancement    of 

Remedy 196 

420.  Strict  Technical  Rules  of  Pleading 197 

421.  Greater  Liberality  than  at  Common  Law..  .  .  197 

422.  Fullness  and  Particularity  of  an  Indictment 

not  Required 198 

423.  New  Problem  in  Pleading 198 

424.  Full  History  of  Facts 198 

425.  Essential  Averments 199 

426.  Rice  v.  Standard  Oil  Co 199 

427.  Allegations  of  Facts  Constituting  Conspiracy  200 

428.  Steps   of   Conspiracy    Constituting   but   one 

Cause  of  Action 200 

429.  Scheme  or  Combination  as  a  Whole 201 

430.  Examples  of  Plaintiff's  Pleadings 201 

431.  Pendency  of  Action  in  State  Court 201 

432.  General  Appearance  and  Waiver 202 

433.  Withdrawal  of  Plea  to  File  Demurrer 203 

434.  Bill  of  Particulars 203 

435.  Discretion  of  Lower  (^ourt 203 

436.  Delayed    Raising    of    Defense    in    Appellate 

Court 203 

437.  Allegations  must  show  Damage 204 

438.  Exercise  of  Power  Resulting  in  Injury 204 

439.  Injury  Where  Restraint  is  Incomplete 204 

440.  Injury  Produced  by  Acits  Tainted  with  Illegal 

Scheme 204 

441.  Something  more  than  Mental  Intention  Re- 

quired    205 

442.  General  Allegation  of  Damage  is  Sufficient ....  205 

443.  Proximate  and  Continuing  Damages 206 

444.  General  Rule 206 

445.  Actual  Damages  only  Recoverable 206 

446.  Burden  uf  Proof  on  Plaintiff 207 


Table  of  Contents  xxiii 

PAGE 

Section  447.  Reasonable  Certainty 207 

448.  Speculative  and  Remote  Damages 208 

449.  Anticipated  Profits  of  a  Business 208 

450.  Anticipated  Profits  of  Established  Business.  .  208 

451.  Future  Profits  of  New  Business 209 

452.  Preventing  Birth  of  Business 209 

453.  Preventing  Plaintiff  from  Engaging  in  Busi- 

ness   209 

454.  Exclusion  from  Commencing  Business 210 

455.  Exemplary  Damages 211 

456.  Intention  and  Preparedness  to  Engage  in  Busi- 

ness -^  '^ 

457.  Money  Actually  Expended  in  Building  and 

Equipping  Refinery 212 

458.  Injuries  to  Inter  or  Intrastate  Business 212 

459.  Damages  Entirely  within  State 212 

460.  Necessity   of    Investing   Additional   Capital. 

Increased  Cost  of  Doing  Business 213 

461.  Enhanced  Price  of  Commodities 213 

462.  Excess  Cost  of  Commodities  and  Extra  Clerk 

Hire 214 

463.  Injury  to  Property 214 

464.  Effect  of  Rebates 215 

465.  Avoidable  Injuries 215 

466.  Set-Off 215 

467.  Attorney's  Fee 216 

468.  Direction  of  Verdict 216 

469.  Evidence  of  Conduct  of  Defendant  after  De- 

struction of  Plaintiff's  Business 216 

470.  Stolen  Papers  may  be  Offered  in  Evidence 217 

471.  Introduction  of  Newspapers 217 

472.  Reasons  for  Termination  of  Custom 217 

473.  Use  in  Evidence  of  Final  Judgment  or  Decree 

Rendered  in  Government  Proceedings .  .  .   217 

CHAPTER  XVI 

The  Sherman  Anti-Trust  Act  as  a  Defense  to  Actions  at 

Law  or  in  Equity 219-226 

Section  474.  Sherman  Law  is  Good  Defense  when  Pertinent  219 
475.  Enforcement  of  Unlawful  Agreement 219 


xxiv  Table  of  Contents 

PAGE 

Section  476.  Parties  in  Pari  Delicto 220 

477.  Executed  and  Executory  Contracts 220 

478.  Appointment  of  Receiver 220 

479.  Inevitable  Tendency  to  Injure 221 

480.  Enforcement  of  Rebate  Agreement 221 

481.  Essential  Part  of  Illegal  Scheme 221 

482.  Protection  of  Conspiracy  to  Fix  Rates 222 

483.  Common  Law  Contracts  in  Restraint  of  Trade 

not  Prohibited  but  Unenforceable 222 

484.  General  Iniquitous  Conduct 222 

485.  Test  is  Whether  Illegality  is  Involved 223 

486.  Contract  not  Tainted  with  Illegality 224 

487.  Patent  and  Trade-Mark  Suits 225 

488.  As  a  General  Rule,  Defense  of  Act  must  be 

Specially  Pleaded 225 

489.  Lateness  of  Presentation  of  Defense 226 

CHAPTER  XVII 

Patents,  Copyrights,  Trade-Marks    and  Trade   Secrets 

227-255 
Section  490.  Patent  Franchise  Includes  Merely  Right  to 

Exclude 227 

491.  Three  Rights  Embraced 227 

492.  Dual  Nature  of  Right  of  Patentee 227 

493.  Patentee  has  no  Affirmative  Right  Under  a 

Patent  to  Make,  Use  and  Sell 228 

494.  Purpose  and  Scope  of  Patent  Statute 228 

495.  ILse  for  Unlawful  Purpose  not  Authorized .  .  .    229 

496.  No  Right  Given  to  Sell  Indulgences 229 

497.  Patents  do  not  Confer  License  Against  Pro- 

hibition of  Law 229 

498.  Patent    Cannot    Extend    Power   and    Create 

Further  Monopolies 230 

499.  Sherman  Law  Discloses  no  Intent  to  Exempt 

Patentees 230 

500.  Patentee  may  not  Restrain  Trade  Gutside  of 

Patent 230 

501.  Patentee    in    Spite    of    Sherman    Law    may 

Mono]K)lizi'  Thing  Invented 231 


Table  of  Contents  xxv 

PAGE 

Section  502.  Limitation    upon    a   Patentee's   Contractual 

Power 231 

503.  Right  to  Exclude  Exercised  only  by  Infringe- 

ment Suits 232 

504.  States  in  Exercise  of  Police  Powers,  etc.,  may 

Prevent  Sales  of  Patented  Articles 232 

505.  Patent  Right  in  Channels  of  Commerce 232 

506.  Patented  Articles  not  Outside  of  Act 233 

507.  Prohibited  Monopoly  of  Patented  Articles.  .  .   233 

508.  Contra:  No  Prohibited  Monopoly  of  Patented 

Articles 233 

509.  CJontract  to  Restrain  Patentee's  Own  Trade. .   233 

510.  Patentee  has  no  Right  to  Restrain  Himself.   234 

511.  Contract  of  Non-Use  Under  Patent 234 

512.  Combination  of  Distinct  Patent  Owners  Re- 

straining Trade 234 

513.  C'ombination  of  Owners  of  Independent  Pat- 

ents     235 

514.  Contracts  Creating  such  a  Combination  are 

Within  Sherman  Law 235 

515.  Agreements  of  Independent  Patentees  not  to 

Compete 236 

516.  Combination  Through  Use  of  Exclusive  Li- 

cense Contracts 236 

517.  First  Section  Applies  to  Combination  to  Re- 

strain Trade  in  Patented  Articles 238 

518.  Combination     of      Non-Competing     Patent 

0\vners  not  Prohibited 238 

519.  Patents  Constituting  Single  Mechanical  Ev- 

olution    238 

520.  Multitude  of  Identical  Agreements. 239 

521.  Assignment  an  Integral  Part  of  Scheme 239 

522.  Patents  Cannot  Cover  Violations  of  Law 240 

523.  Grant  of  Patent  does  not  Sanction  Acts  of 

Violence 240 

524.  Patent  does  not  Excuse  Conspiracy  to  Re- 

strain Trade 240 

525.  Patentee  Cannot  Excuse  or  Cloak  Monopolies 

Outside  of  Patent 240 

526.  Monopoly  Beyond  Patent  Term 241 


xxvi  Table  or  Contents 

PAGE 

Section  527.  Added  Elemont  of  {'atent  Cannot  Excuse  Com- 
bination Otherwise  Prohibited 241 

528.  Right  of  Contract  Under  Patents 242 

529.  Patentee's  Right  of  Contract  not  Peculiarlj^ 

Subject-Mat  t  er  for  Federal  Court 242 

530.  Right  of  Purchas^er  of  Patented  Article 243 

531.  Patentee  cannot  Control  Future  Price  of  Sub- 

sequent Sales 243 

532.  Where     Full    Consideration    has    not    been 

Paid 244 

533.  Reasonable  and  Legal  Conditions  not  Prohib- 

ited    244 

534.  General  Rule 245 

535.  Contract  Coextensive  with  Patent  Monopol.v  246 

536.  Restriction  to  Enhance  Value  of  Patent 246 

537.  Selling  Price  Restrictions 246 

538.  Reasonable  Restriction  in  License  Contracts. 

Exclusive  Use 246 

539.  Maintenance   of    Prices    and    Restriction    of 

Competition 217 

540.  Restriction  must  not  Violate  Some  Law  Out.- 

side  of  Patent  Law 247 

541 .  Restraints  Cannot  Disable  Public  Service  Cor- 

poration in  Performance  of  its  Duties. .  .    247 

542.  Restriction  to  Prevent  Infringement 248 

543.  Settlement  of  Suits  for  Infringement 248 

544.  General  Rule  that  on  Suits  for  Infringement, 

Sherman  Anti-Trust  Act  is  no  Defense. .  .    248 

545.  Violation  of  Act  no  Defense  in  Infringement  of 

TnuU-Mark 250 

546.  Doctrine  that  Defense  maybe  Raised  Where 

Illegal  Agreement  is  Necessarily  Involved  250 

547.  Enjoining  of  Bringing  of  Infringement  Suits..   251 

548.  Sinniltaneous  Bringing  of  Infringement  Suits 

by  Competitors 252 

549.  Copyright  Act  does  not  Confer  Right  to  Con- 

trol Future  Sales 252 

550.  Where  Purchaser  is  Absolute  Owner 252 

551.  Proi^rietor  of  Copyright   after  Absolute  Sale 

Cannot  Reslricl  Alienation 252 


Table  of  Contents  xxvii 

PAGE 

Section  552.  No  Infringement  of  CopjTight  to  Violate  Price 

Restriction 253 

553.  Single  Owner 253 

554.  Purpose  of  Acquisition  Immaterial 253 

555.  Acquisition  by  Single  Owner  must  not  be  Mere 

Cover  for  Combination 254 

556.  Copyright  Statute  Cannot  Authorize  Agree- 

ments or  Combinations  in  Restraint  of 
Trade 254 

557.  Contracts  Relating  to  Secret  Formulas 255 

558.  Covenant  of  Vendor  not  to  use  Secret  Process  255 

559.  Articles    made   under    Secret    Formulas    not 

Exempt  from  Law 255 

CHAPTER  XVIII 

Witnesses:  SuBPfENA  Duces  Tecum,   Immunity,  Contempt 

256-270 
Section  560.  Subpoenas  in  General 256 

561.  Necessity  of  Application  for  Subpoena  Duces 

Tecum 256 

562.  Definiteness  Required 256 

563.  Persons  Subject  Thereto 257 

564.  Reasonable  Ground  of  Relevancy 257 

565.  Mere  Statement  that  Documents  are  Mate- 

rial    257 

566.  Unreasonable  Searches  and  Seizures 25S 

567.  Claim  of  Immateriality  by  Witness 259 

568.  Books  and  Papers  of  a  Private  Nature 259 

560.  Officers  of  a  Corporation 260 

570.  Presence  in  Court  of  Witness  or  Documents. .  260 

571.  Effect  of  Production  of  Books  and  Papers.  .  .  260 

572.  Motion  to  Quash 261 

573.  General  Power  of  Equity  Court 261 

574.  Incrimination  of  Witness 261 

575.  Immunity  Stat  ute 262 

576.  Status  of  Immunity  Law  Prior  to  June  30, 1906  262 

577.  Purpose  of  Immunity  Acts 262 

578.  Ab.solute  Immunity  must  be  Given 263 

579.  Scope  of  Section  860  of  the  Revised  Statutes .  .  263 


xxviii  Table  of  Contents 

PAGE 

Section  580.  Meaning  of  "Proceeding" 264 

581.  Operation  of  Fifth  Amendment 264 

582.  When  Fifth  Amendment  does  not  Apply 264 

583.  Immunity  is  Personal.     Third   Persons  not 

Protected 265 

584.  Breadth  of  Present  Immunity  Statutes 265 

585.  No  Immunity  for  Corporation,  but  Possibly 

for  Officer  or  Agent 265 

586.  No  Necessity  to  Claim  Immunity 266 

587.  Defendants    Called    as    Witnesses    by    Co- 

defendants  266 

588.  Sworn  Answers  of  Defendants  to  Government 

Bill  in  Equity 266 

589.  Effect  of  Immunity  under  State  Statute 267 

690.  Effect    of    Federal    Immunity    upon    State 

Courts 267 

591.  Contempt:  Prohibition  must  be  Clearly  De- 

fined     267 

592.  Information  in  Contempt  Proceedings 267 

593.  Lack  of  Jurisdiction 268 

594.  Cannot  Disobey   Injunction  Because  Bill  is 

Demurrable 268 

595.  Criminal  Contempt.    Reasonable  Doubt 268 

596.  Inquisitorial  Power  of  (irand  Jury 269 

597.  Interf(;rencc  with  Receiver 269 

598.  Enticing  away  Employees  of  Receiver 270 

599.  Writ  of  Error  or  Appeal  on  Judgment  for  Con- 

tempt     270 

600.  Punishment   for    Contempt    under    Claj'ton 

Act 270 

CHAPTER  XIX 

The  Clayton  Act 271-286 

Section  601.  Clayton  Act  in  General 271 

602.  Commerce  Defined 271 

603.  "Person"  or  "Persons"  Defined 272 

604.  Price  Discrimination 272 

605.  Exclusive  Use  Restrictions  or  Conditions  on 

Patented  or  Unpatented  Articles 273 


Table  of  Contents  xxix 

pa(;e 
Section  006.  Extonsion  of  Action  at  Law  to  Include  Further 

( )fT(>nses  Forliidden  by  Act 273 

607.  Effect  u[H)n  Action  at  Law  of  Final  Judgment 

or  Decree  in  Ciovernment  Suits 274 

60S.  Susi)en.sion  of  Running  of  Statute  of  Limita- 
tions in  Private  Actions 274 

609.  Labor,  Agricultural  or  Horticultural  Organiza- 

tions      274 

610.  Ownership  by  one  Corporation  of  the  Capital 

Stock  of  Another 275 

611.  Interlocking   Directorates   and   Double   Em- 

ployment     275 

612.  Changes  in  Affairs  Affecting  Eligibility 277 

613.  Embezzlement,  by  Officers  or  Employees  of 

Common  Carriers 277 

614.  Competitive  Bidding  in  Dealings  with  Com- 

mon Carriers 277 

615.  Enforcement    of    Compliance    with    Sections 

Two,  Three,  Seven  and  Eight 278 

616.  Complaint  Under  the  Act 278 

617.  Proceedings     to    Enforce     Order     of     Com- 

mission    279 

618.  Application  to  Adduce  Additional  Evidence.  .  279 

619.  Review  by  Supreme  Court  upon  Certiorari .  .  280 

620.  Review  of  Order  of  Commission  by  Circuit 

Court  of  Appeals 280 

621.  Exclusive   Jurisdiction    of    Circuit    Court   of 

Appeals  of  the  United  States 280 

622.  Precedence  of  Proceedings  Relative  to  Orders 

of  Commission  or  Board 281 

623.  Order  Cannot    Relieve  Liability  Under  the 

Anti-Trust  Acts 281 

624.  Service    of    Complaints,    Orders    and    Other 

Processes 281 

625.  Venue  of  Actions  Against  Corporations 281 

626.  Where  Subpoena  for  Witnesses  may  Run 282 

627.  When  Violation  by  Corporation  is  also  Viola- 

tion by  its  Officers 282 

628.  Proceedings  in  lilquity  by  the  ITnited  States.  .   282 

629.  Proceedings  in  Equity  by  a  Private  Person .  .  .   282 


XXX  Table  of  Contents 

PAGE 

Section  630.  Issvianco  of  Proliminarv  Injunctions  and  Re- 
straining Orders 283 

631.  Giving   of    Security    by    Applicant    for    Re- 

straining Order 283 

632.  Formal  Requisites  and  Scope  of  Injunction 

and  Restraining  Order 284 

633.  Injunctions  and  Restraining  Orders  Between 

Employers  and  Employees 284 

634.  Peaceful  Persuasion,  Termination  of  Employ- 

ment, Cessation  of  Patronage,  etc.,  not 

to  be  Enjoined 284 

635.  Contempt  Proceedings 285 

636.  Effect  of  Invalid  Matter 286 

CHAPTER  XX 

The  Federal  Trade  Commission  and  Unfair  Trade.  .287-297 
Section  637.   New  Regime  in  Remedial  Legislation 287 

638.  Personnel  of  the  Commission 287 

639.  Bureau  of  Corporations  and  Commissioners 

Abolished 288 

640.  Principal  Office  and  Places  of  Meeting 288 

641.  Persons  or  Concerns  Subject  to  Act 288 

642.  Unfair  Methods  of  Competition 288 

643.  Unfair  Competition  Defined 288 

644.  General   Grounds   for   Prevention   of    Unfair 

Competition 289 

645.  Scope  of  "Unfair  Methods  of  Competition " .  .  289 

646.  Complaint  Under  the  Act 290 

647.  Testimony  and  Report 290 

648.  Enforcement  of  Order 291 

649.  Additional  Evidence 291 

650.  Review  by  Supreme  Court 291 

651.  Review  in  U.  S.  Circuit  Court  of  Appeals 292 

652.  Exclusive  Jurisdiction  of  U.  S.  Circuit  Court 

of  Appeals 292 

653.  Expediting  of  Proceedings  under  the  Act 292 

654.  No  Relief  from  Liability  under  the  Anti-Trust 

Acts 292 

655.  Additional  Powers  of  Commission 292 


Table  of  Contents  xxxi 

PAGE 

Section  656.  Further  Powers  of  Commission  given  bj'  Clay- 
ton Act  293 

657.  Form  of  Decree  in  Anti-Trust  C'ases 294 

658.  Right  to  Copy  Documentary  Evidence  of  Cor- 

poration    294 

659.  Witnesses 295 

660.  Mandamus 295 

661.  Depositions 295 

662.  Immunity 296 

663.  Refusal  to  Testify 296 

664.  False  Returns  or  Reports 296 

665.  Failure  of  Cori)oration  to  File  Annual  and 

Special  Reports 296 

666.  Unlawful  Publication  by  Officer  of  Commis- 

sion     297 

667.  Not  to  Prevent  or  Interfere  with  the  Enforce- 

ment of  Other  Acts 297 


APPENDIX 

The  Sherman  Law 299-301 

Anti-Trust  Amendments  to  Wilson  Tariff  Act 301-304 

The  Expedition  Act 304-307 

The  Judicial  Code  (Abolition  of  Circuit  Court) 307-308 

The  Immunity  Acts 308-310 

The  Clayton  Act 310-332 

The  Federal  Trade  Commlssion  Act 332-345 

Further  Amendments  of  Wilson  Tariff  Act 345-347 


TABLE  OF  CASES 

[References  are  to  sections] 

A.  Booth  &  Co.  ;'.  Davis,  127  Fed.  STo 178,  184 

Adam.s  v.  Burke,  17  Wall.  453 531 

Addyston  Pipe  &  Steel  Co.  r.  V.  S.,  175  U.  S.  211 .  .27,  31,  34,  57, 

70,   1G8,   189,  2 IS,  229,  239,  240,  278,  307 

Aikens  v.  Wisconsin,  195  U.  S.  194 277,  289 

Albright  ;'.  Teas,  106  U.  S.  613 529 

Aldridge  ;;.  Williams,  3  How.  9 118 

Alexander  i^  U.  H.,  201  U.  S.  117 599 

Alger  V.  Thacher,  19  Pick.  (Mass.)  51 10 

American  Banana  Co.  v.  United  Fruit  Co.,  166  Fed.  261.  .220, 

406,  437,  456 

American  Banana  Co.  v.  United  Fruit  Co.,  213  U.  S.  347 49 

American  Bi.scuit,  etc.,  Co.  v.  Klotz,  44  Fed.  721..  130,  262, 

475,  478 

American  Brake  Beam  Co.  v.  Pungs,  141  Fed.  923 536 

American  Tobacco  Co.  v.  People's  Tobacco  Co.,  204  Fed.  58.  .  .  .  395 

American  Union  Coal  Co.  v.  Penn.  Ry.  Co.,  159  Fed.  278 87 

Ames  V.  American  Tel.  &  Tel.  Co.,  166  Fed.  820 405 

Anderson  v.  Shawnee  Compress  Co.,  87  Pac.  315.  .  115,  133,  187,  300 

Anderson  v.  U.  S.,  171  U.  S.  604 61,  140,  169,  177,  241 

Armour  Packing  Co.  v.  U.  S.,  209  IT.  S.  56 311 

Bauer  v.  O'Donnell,  229  U.  S.  1 493,  494,  531,  532 

Bement  v.  Nafl  Harrow  Co.,  186  U.  S.  70.  .474,  504,  521,  533, 

534,  537,  538,  541,  542,  543 

Bigelow  V.  Calumet  &  Hecla  Mining  Co.,  155  Fed.  869 370 

Bigelow  r.  Calumet  &  Hecla  Mining  Co.,  167  Fed.  704 .    171,  249, 

273,  307 

Bigelow  V.  Calumet  &  Hecla  Mining  Co.,  167  Fed.  721 249,  306 

Bishop  V.  American  Preservers'  Co.,  51  Fed.  272 365,  396 

Blanchard  v.  Sprague,  1  Cliff.  288 529 

Blindell  v.  Hagan,  54  Fed.  40 367,  370 

Block  V.  Standard  Distilling,  et(!.,  Co.,  95  Fed.  978 372 


xxxiv  Table  of  Cases 

[References  are  to  sections] 

!  Bloomer  r.  MoQuewan,  14  How.  539 490 

Blount  Mfg.  Co.  V.  Yale  &  Towne  Mfg.  Co.,  166  Fed.  555.  .  183, 

493,  506,  507,  509,  510,  511,  513,  514,  515,  535,  539 

Board  of  Trade  v.  Christie  Grain  &  Stock  Co.,  198  U.  S.  236 299 

Bobbs-Merrill  Co.  v.  Straus,  139  Fed.  155.  .234,  274,  512,  517, 

524,  530,  549,  550,  551,  552,  553,  554,  555,  556 

Bobbs-Merrill  Co.  r.  Straus,  210  U.  S.  339 549,  550,  551 

Bowman  v.  Chicago  &  N.  W.  Railway,  125  U.  S.  465 38 

Brady  v.  Daly,  175  U.  S.  148 411 

Brown  ;-.  Houston,  114  U.  S.  622 69 

Brown  v.  Maryland,  12  Wheat.  419 38 

Brown  v.  Shannon,  20  How.  55 529 

Buckeye  Powder  Co.  v.  E.  I.  Du  Pont  De  Nemours  P.  Co.,  196 

Fed.  514 394,  416,  417,  421,  428,  430,  434,  455 

Buckeye  Powder  Co.  v.  Hazard  Powder  Co.,  205  Fed.  827 469 

Burr  /'.  Gregory,  2  Paine,  426 529 

Caldwell  v.  North  Carolina,  187  II.  S.  622 51 

Carter-Crume  Co.  v.  Peurrung,  86  Fed.  439 488 

Central  Coal  &  Coke  Co.  v.  Hartman,  111  Fed.  96.445,  449,  450,  451 

Central  Trans.  Co.  v.  Pullman  Palace  Car  Co.,  139  U.  S.  24 55S 

C.  F.  Sinmions  Medicine  Co.  v.  Mansfield  Drug  Co.,  93  Tenn.  84  644 

Charles  E.  Wiswall  (The),  74  Fed.  802 486 

Charles  E.  Wiswall  (The),  86  Fed.  671 485,  486 

Chattanooga  Foundry  <fe  Pipe  Works  r.  Atlanta,  203  U.  S.  390 

287,  393,  408,  411,  459,  461,  463 
Chesapeake  A  Ohio  Fuel  Co.  v.  U.  S.,  115  Fed.  610.  .22,  134, 

237,  273,  274 
Chicago  Wall  Paper  Mills  r.  (General  Paper  (b.,  147  Fed.  491 ..  .   232 

Cilley  V.  United  Shoe  Machinery  Co.,  152  Fed.  720 413,  418 

Cilley  )).  United  Shoe  Machinery  Co.,  202  Fed.  598.  .  .404,  425,  429 

Cincinnati  Packet  Co.  v.  Bay,  200  U.  S.  179 170,  175,  183,  489 

City  of  Atlanta  v.  Chattanooga  F.  &  P.  Co.,  101  Fed.  900 411 

City  of  Atlanta  ;'.  C'hattanooga  F.  &  P.  Co.,  127  Fed.  23.  .345, 

402,  408,  411,  458,  459,  461 
Clabaugh  v.  Southern  Wholesale  Grocers'  Assn.,  181  Fed.  706.  .   467 

Coca-Cola  Co.  v.  Deacon  Brown  Bottling  Co.,  200  Fed.  105 545 

Coe  v.  Errol,  116  U.  S.  517 69 

i  Cohens  v.  Virginia,  6  Wheat.  264 122 

IConunoiiwealth  /'.  Hunt,  4  Met.  (Mass.)  Ill 331 


Table  of  Cases  xxxv 

(References  are  to  sections) 

Connolly  v.  Union  Sewer  Pipe  Co.,  184  U.  S.  .540.  .29,  185,  232, 

466,  475,  487,  543 
Continental  Paper  Bag  Co.  v.  Eastern  Paper  Bag  Co.,  210  U.  S. 

405 493 

Continental  Wall  Paper  Co.  v.  Voight  &  Sons  Co.,  148  Fed.  939  475 
Continental  Wall  Paper  Co.  v.  Voight  <&  Sons  Co.,  212  IJ.  S.  227 

185,  225,  233,  287,  293,  475,  481 

Core  V.  Independent  Ice  Co.,  207  Fed.  456 367,  371,  405 

Counselnian  v.  Hitchcock,  142  U.  S.  547 578,  579 

Cravens  r.  Carter-Crume  Co.,  92  Fed.  479 242,  468 

Dale  Tile  Mfg.  Co.  v.  Hyatt,  125  U.  S.  46 529 

Dancel  v.  Goodyear  Shoe  Machinery  Co.,  128  Fed.  753 .,  561 

Darius  Cole  Transp.  Co.  v.  White  Star  Line,  186  Fed.  63.  .44, 

68,  182,  292 

Davis  V.  A.  Booth  &  Co.,  131  Fed.  31 178,  184,   191 

De  Koven  v.  Lake  Shore  &  M.  S.  Ry.  Co.,  216  Fed.  955 370 

Delaware,  etc.,  Tel.  Co.  v.  Postal  Telegraph  Co.,  50  Fed.  677 ..  .   528 

Delaware,  L.  &  W.  R.  Co.  v.  Frank,  110  Fed.  689 482,  484 

D.  E.  Loewe  &  Co.  v.  Lawlor,  130  Fed.  633 431 

Dennehy  v.  M'Nulta,  86  Fed.  825 298,  480,  486 

Dodson  V.  Farbenfabriken  of  Elberfield  Co.,  206  Fed.  125 399 

Dr.  Miles  Medical  Co.  v.  John  D.  Park  &  Sons  Co.,  164  Fed.  803 

557,  559 
Dr.  Miles  Medical  Co.  v.  John  D.  Park  &  Sons  Co.,  220  U.  S. 

373 165,  225,  227,  293,  557,  559 

Dueber  Watch  Case  Mfg.  Co.  v.  Howard  Watch  Co.,  55  Fed. 

851 246,  408 

Dueber  Watch  Case  Mfg.  Co.  ('.  Howard  Watch  Co.,  66  Fed.  637 

37,  155,  441 

Eastern  States  Retail  Lumber  Dealers'  Asso.  v.  U.  S.,  234  U.  S. 

600 90,   126,  163,  223,  224 

Ellis  V.  Inman,  Poulesen  &  Co.,  131  Fed.  182 236,  284 

Embrey  v.  Jeniison,  131  U.  S.  336 475 

Farrer  v.  Close,  L.  R.  4  Q.  B.  602 154 

Fleitmann  v.  United  Gas  Improvement  Co.,  211  Fed.  103.  .371,  405 

Foot  V.  Buchanan,  113  Fed.  156 574,  579 

Frisbie  i'.  U.  S.,  157  U.  S.  160 , 35 


xxxvi  Table  of  Cases 

[References  are  to  sections] 

Garst  V.  Hall  &  Lyon  Co.,  179  Mass.  588 551 

General  Electric  Co.  v.  Wise,  119  Fed.  922 487,  544 

Gibbons  v.  Ogden,  9  Wheat.  1 38 

Gibbs  V.  Baltimore  Gas  Co.,  130  U.  S.  396 179 

Gibbs  V.  M'Neely,  118  Fed.  120 37,  51,  285 

Gloucester  Ferry  Co.  v.  Penn.,  114  U.  S.  203 38,  57 

Gompers  v.  Bucks  Stove  &  Range  Co.,  221  U.  S.  418 90,  124 

Goodyear  v.  Union  Rubber  Co.,  4  Blatchf.  63 529 

Gulf/C.  &  S.  F.  Ry.  Co.  v.  Miami  S.  S.  Co.,  86  Fed.  407.  .  .  .367,  370 

Hadley  Dean  P.  G.  Co.  v.  Highland  Gla,ss  Co.,  143  Fed.  242 232 

Hagen  v.  Blindell,  56  Fed.  696 370 

Hale  V.  Hatch  &  North  Coal  Co.,  204  Fed.  433 208 

Hale  V.  Henkel,  201  U.  S.  43.  .470,  566,  578,  581,  582,  583,  585, 

589,  590 
Harriman  v.  Northern  Securities  Co.,  197  U.  S.  244 122,  315, 

476,  477 
Heaton-Peninsular  Button   Fastener  Co.  t>.  Eureka  Specialty 

Co.,  77  Fed.  288 502,  528 

Henry  v.  Dick  Co.,  224  U.  S.  1 491,  532 

Hilton  V.  Eckersley,  6  El.  &  Bl.  147 154 

Hopkins  r.  U.  S.,  171  U.  S.  578.  .41,  52,  61,  62,  63,  64,  65,  140, 

168,  169 

Hornby  ;;.  Close,  L.  R.  2  Q.  B.  153 154 

Howe  Scale  Co.  v.  Wyckoff,  Seamans,  etc.,  198  U.  S.  118 643 

Hume  V.  U.  S.,  118  Fed.  689 329 

Huntington  v.  Attrill,  146  U.  S.  657 411 

Indiana  Mfg.  Co.  v.  J.  I.  Case  Threshing  Machine  Co.,  154  Fed. 

365 519 

///  re  American  Sugar  Refining  Co.,  178  Fed.  109 563 

In  re  Charge  to  Grand  Jury,  151  Fed.  834.  .2,  3,  7,  20,  38,  40,  212 

In  re  Corning,  51  Fed.  205 326,  353 

In  re  Debs,  158  U.  S.  564 27 

In  re  Grand  Jury,  62  Fed.  840 40,  78,  112 

In  re  Greene,  52  Fed.  104.  .38,  51,  54,  69,  142,  154,  155,  160,  259, 

260,  261,  298,  325,  328 

In  re  Hale,  139  Fed.  496 317,  566,  580,  596 

In  re  Kittle,  ISO  Fed.  946 317 

In  re  Terrell,  51  Fed.  213 159,  353 


Table  of  Cases  xxxvii 

(References  are  to  sections] 

Insurance  Co.  v.  Clunie,  88  P>d.  170 484 

Interstate  Commerce  Commission  v.  Philadelphia  &  R.  Ry.  Co., 

123  Fed.  969 453 

Irving  V.  Neal,  209  Fed.  471 95,  367 

Jarvis  v.  Knapp,  121  Fed.  34 17 

Jayne  v.  Loder,  149  Fed.  21 203,  225 

Jewett  V.  Atwood  Suspender  Co.,  100  Fed.  647 492 

John  D.  Park  &  Sons  Co.  v.  Hartman,  153  Fed.  24 .  .  18,  172,  286, 

293,  295,  520 

Kansas  v.  Colorado,  185  U.  S.  125 323 

Keeler  v.  Standard  Folding  Bed  Co.,  157  U.  S.  659 530 

Kellogg  Toasted  Corn  Flake  Co.  v.  Buck,  208  Fed.  383 531 

Kentucky  v.  Indiana  Bridge  Co.  v.  Louisville,  etc..  Railroad,  37 

Fed.  567 63 

Kidd  V.  Pearson,  128  U.  S.  1 57,  69 

King  V.  Waddington,  1  East,  143 5 

Lawlor  v.  Loewe,  209  Fed.  721 301,  443 

Lawlor  v.  Loewe,  235  U.  S.  522 106,  223,  443,  471,  472 

Leisy  v.  Hardin,  135  U.  S.  100 38 

Leonard    v.    Abner-Drury    Brewing   Co.,    25   Appeal    (D.    C.) 

Cases,  161 370 

Locker  v.  American  Toliacco  Co.,  197  Fed.  495 412 

Loder  v.  Jayne,  142  Fed.  1010 209,  446,  447,  460,  462 

License  Cases,  5  How.  504 38 

Loeb  V.  Columbia  Township  Trustees,  179  U.  S.  472 29 

Loeb  V.  Eastman  Kodak  Co.,  183  Fed.  704 405,  433 

Loewe  v.  Lawlor,  142  Fed.  216 415 

Loewe  r.  Lawlor,  208  U.  S.  274.  .8,  58,  78,  91,  129,  132,  171,  277, 

287,  407 

Lowenstein  v.  Evans,  69  Fed.  908 406 

Lowry  V.  Tile,  Mantel  &  Grate  Assn.,  98  Fed.  817 432 

Lowry  v.  Tile,  Mantel  &  Grate  Assn.,  106  Fed.  38.  .51,  447,  448,  465 

Mannington  v.  Hocking  Valley  Ry.  Co.,  183  Fed.  133 117,  120 

Marrash  v.  U.  S.,  168  Fed.  225 208 

McAlister  (;.  Henkel,  201  U.  S.  90 583 

McCoimell  v.  Camors-McConuell  Co.,  152  Fed.  321 193 


xxxviii  Table  of  Cases 

[References  are  to  sections] 

McLean  v.  Fleming.  96  U.  S.  245 644 

McMullen  r.  Hoffman,  174  U.  S.  639 475 

Meeker  v.  Lehigh  Valley  Railroad  Co.,  183  Fed.  548 87,  404 

Merchants  National  Bank  r.  State  National  Bank,  3  Cliff.  201 .  .  563 

Merscrole  c.  Union  Paper  Collar  Co.,  6  Blatchf.  356 529 

Met  calf  V.  .\merican  School  Furniture  Co.,  108  Fed.  909 372,  410 

Metcalf  V.  American  School  Furniture  Co.,  122  Fed.  115 367 

Mitchell  V.  Great  Works  MiUing  &  Mfg.  Co.,  2  Storey,  648 118 

Mitchell  V.  Hitchman  Coal  &  Coke  Co.,  214  Fed.  685.  .99,  100, 

102,  103,  105 

Mol)ile  V.  Kimball,  102  U.  S.  691 38 

Mogul  Steamship  Co.  v.  McGregor,  L.  R.  App.  Cas.  (1892)  25 

12,   13,  154 
Monarch  Tobacco  Works  v.  American  Tobacco  Co.,  165  Fed.  774 

130,  224,  394,  411,  422,  4.39,  440,  444 

Monongahela  Navigation  Co.  v.  U.  S.,  148  U.  S.  312 63 

Montague  v.  Lowry,  193  U.  S.  38 467 

Moore  v.  U.  S.,  85  Fed.  465 26 

Motion  Picture  Patents  Co.  v.  Eclair  Film  Co.,  208  Fed.  416.  .  .  544 

Motion  Picture  Patents  Co.  v.  Laemmle,  178  P^ed.  104 544 

Murray  v.  McGarigle,  69  Wise.  483 427 

Nash  V.  U.  S.,  229  U.  S.  373.    Ill,  125,  126,  206,  30S,  309,  315, 

316,  334,  335 

National  Cotton  Oil  Co.  v.  Texas,  197  U.  S.  115 255,  282 

National  Fire  Proofing  Co.  v.  Mason  Builders  Assn.,  169  Fed.  259  367 
National  Folding  Box  &  P.  Co.  v.  Robertson,  99  Fed.  985.  .487, 

544,  546 

National  Harrow  Co. ;'.  Hench,  76  Fed.  667 513,  516 

National  Harrow  Co.  /•.  Hench,  S3  Fed.  36 ISO,  512,  516,  525 

Nati(jnal  Harrow  C^o.  r.  Hench,  84  Fed.  226 487,  516,  521,  546 

National  Harrow  Co.  t>.  C^uick,  67  Fed.  130 483,  484,  516,  546 

Nelson  i^.  U.  S.,  201  U.  S.  92 567,  569 

Nester  v.  Brewing  Co.,  161  Pa.  St.  473 245 

Nordenfelt  v.  Maxiin-Nordenfelt  Co.  (1894),  App.  Cas.  535.  ..  .    142 
Northern  Securities  Co.  v.  U.  S.,  193  U.  S.  197.  .20,  21,  27,  28, 
32,  33,  72,  113,  129,  171,  216,  247,  250,  251,  273,  274,  280, 

281,  282,  426 

N.  W.  Consol.  Mill.  Co.  v.  Callam  &  Son,  177  Fed.  786 487,  545 

N.  V.  Bank  Note  Co.  /■.  Kidder  Press  Mfg.  Co.,  192  Mass.  391 .  .   488 


Table  of  Cases  xxxix 

[References  are  to  sections] 

O'Halloran  v.  American  Sea  Green  Slate  Co.,  207  Fed.  187.  .  173, 

226,  228,  230,  284,  307,  312,  313,  314,  438 
Opinion  of  the  Jastices  (Mass.  Supreme  Ct.),  193  Mass.  605 

279,  498,  528 

Oregon  Steam  Nav.  Co.  v.  Winsor,  20  Wall.  64 133 

Otis  Elevator  Co.  v.  Geiger,  107  Fed.  131 487,  516,  544 

Penn.  R.  Co.  v.  Commonwealth,  3  Sadler  (Pa.  Sup.  Ct.  Cas.),  83  453 
Penn.  Sugar  Ref.  Co.  v.  Am.  Sugar  Ref.  Co.,  160  Fed.  254.  .441, 

454,  455,  457 

Pensacola  Tel.  Co.  v.  We.stern  Union  Tel.  Co.,  99  U.  S.  1 69 

People  V.  Fisher,  14  Wend.  (N.  Y.)  18 93 

People  V.  Mather,  4  Wend.  (N.  Y.)  230 202 

People's  Tobacco  Co.  v.  American  Tobacco  Co.,  170  Fed.  396 

425,  430 

Pettibone  t;.  U.  S.,  148  U.  S.  197 194,  332 

Philips  V.  lola  Portland  Cement  Co.,  125  Fed.  593 188 

Pidcock  V.  Harrington,  64  Fed.  821 367 

Pope  Mfg.  Co.  V.  GormuUy,  144  U.  S.  224 528 

Post  V.  Bucks  Stove  &  Range  Co.,  200  Fed.  918 371,  405 

Powell  V.  Thompson,  80  Ala.  51 400 

Prescott  &  A.  C.  R.  Co.  v.  Atchison  T.  &  S.  F.  R.  Co.,  73  Fed. 
438 82 

Queen  v.  Hartford  CoUege,  3  Q.  B.  D.  693 118 

Rearick  v.  Pennsylvania,  203  U.  S.  507 67 

Rice  V.  Standard  Oil  Co.,  1.34  Fed.  464 426 

Robbins  v.  Taxing  District,  120  U.  S.  489 51,  52,  69 

Robert  H.  Ingersoll  &  Bro.  ;;.  McColl,  204  Fed.  147 531 

Robinson  v.  Suliurban  Brick  Co.,  127  Fed.  804 278,  431 

Rubber  Tire  Wheel  Co.  v.  Milwaukee  R.  W.  Co.,  154  Fed.  358 

508,  540 

Salt  Co.  V.  Guthrie,  35  Ohio  St.  666 479 

Sands  v.  Manistee  River  Improvement  Co.,  123  U.  S.  288 63 

Scott  V.  Donald,  165  U.  S.  58 454 

Sessions  v.  Johnson,  95  U.  S.  347 400 

Shawnee  Compress  Co.  v.  Anderson,  209  U.  S.  423 179,  291 

Southern  Ind.  Exp.  Co.  v.  U.  S.  Express  Co.,  88  Fed.  659 367 

Spencer  r.  Lapsley,  20  How.  264 435 


xl  Table  of  Cases 

[References  are  to  sections] 

St.  Louis,  etc.,  Ry.  Co.  v.  Terre  Haute,  etc.,  Ry.  Co.,  145  U.  S. 

393 476,  477 

St.  Louis,  etc.,  Railroad  Co.  v.  Wear,  135  Mo.  230 593 

Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  1 .  .4,  5,  6,  14,  118,  126,  130, 
131,  141,  143,  146,  149,  151,  155,  158,  167,  256,  263,  267,  271, 

310,  380,  388,  403 
Standard  Sanitary  Mfg.  Co.  v.  U.  S.,  226  U.  S.  20.  .57,  238,  311, 

507,  520,  527,  546 

State  V.  Delaware  Tel.  i\:  Tel.  Co.,  47  Fed.  633 495 

State  V.  Parker,  43  N.  H.  So 331 

State  of  Missouri  v.  Bell  Telephone  Co.,  23  Fed.  539 505,  528 

Steers  ;;.  U.  S.,  192  U.  S.  1 71 

Strait  V.  National  Harrow  Co.,  18  N.  Y.  Supp.  224 526,  528 

Strait  V.  National  Harrow  Co.,  51  Fed.  819 547 

Straus  V.  American  Publishers  Assn.,  231  U.  S.  222.  .  .497,  549,  556 
Strout  V.  United  Shoe  Machinery  Co.,  195  Fed.  313.  .397,  409, 

411,  414,  429,  455 
Swift  &  Co.  V.  U.  S.,  196  U.  S.  375.  .48,  268,  277,  287,  288,  300, 

302,  303,  304,  359,  376,  422,  423,  426 

Thomas  v.  Cincinnati,  N.  O.  &  T.  P.  Ry.  Co.,  62  Fed.  803.  .96, 

194,  597,  598 

Thonisen  v.  Union  Castle  Mail  S.  S.  Co.,  166  Fed.  251 .  .  166,  219, 

298,  453,  464 

Tift  V.  Southern  Ry.  Co.,  138  Fed.  753 235 

Tribolet  u.  U.  S.,  95  Pac.  85 216,  324,  333 

Union  Castle  Mail  S.  S.  Co.  v.  Thom.sen,  190  Fed.  530 143 

Union  Pacific  Coal  Co.  v.  U.  S.,  173  Fed.  737.  .  .  .  169,   171,  349,  351 

Union  Sewer  Pipe  Co.  r.  Connelly,  99  Fed.  354 484 

United  Shoe  Machinery  Co.  v.  La  Chapelle',  212  Mass.  467.  .  169, 

2()6,  294,  499 
U.  S.  V.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271.  .9,  10,  11,  12, 
13,  51,  122,  142,  154,  176,  178,  186,  194,  239,  289,  297,  479 

U.  S.  V.  Agler,  62  Fed.  824 90,  362,  383,  387,  592,  594 

U.  S.  V.  American  Naval  Stores  Co.,  172  Fed.  455.  .43,  200,  204,  272 
U.  S.  ('.  American  ToIkicco  Co.,  164  Fed.  700.  .67,  178,  181,  192, 

229,  248,  250,  258,  276 
U.  S.  V.  American  Tobacco  Co.,  221  U.  S.  106.  .129,  130,  132, 

140,   144,   145,   152,   laS,    163,    164,   169,  377 


Table  of  Cases  xli 

(References  are  to  sections] 

U.  S.  V.  Armour  &  Co.,  142  Fed.  808.  .570,  571,  576,  577,  584, 

585,  586 
U-S.  V.  Atchison,  T.  &  S.  F.  Ry.  Co.,  142  Fed.  176.  .  .  .591,  593,  595 

U.  S.  V.  Cassidy,  67  Fed.  698 40,  72,  78,  195,  201 

U.  S.  V.  Chesapeake  &  Ohio  Fuel  Co.,  105  Fed.  93 275,  283 

U.  S.  V.  Coal  Dealers  Assn.,  85  Fed.  252.  .  .  .40,  132,  245,  361,  363 

U.  S.  V.  Cruikshank,  92  U.  S.  542 328 

U.  S.  V.  Debs,  64  Fed.  724.  .40,  42,  72,  88,  101,  104,  153,  157, 

194,  264,  325,  346,  358,  360 
U.  S.  V.  Du  Pont  De  Nemours  &  Co.,  188  Fed.  127.  ...  121,  127,  213 

U.  S.  V.  E.  C.  Knight  Co.,  60  Fed.  934 53,  60 

U.  S.  V.  E.  C.  Knight  Co.,  156  U.  S.  20.  .20,  38,  47,  53,  55,  60, 

61,  66,  114,  270,  273,  278,  408 

U.  S.  V.  Elliott,  62  Fed.  801 78,  97,  366,  370 

U.  S.  V.  Elliott,  64  Fed.  27 48,  78,  94,  97,  123,  234,  360 

U.  S.  V.  Freight  Association,  166  U.  S.  290.  .36,  42,  72,  73,  74, 
75,  76,  86,  118,  119,  129,  162,  183,  217,  237,  243,  244,  281,  282, 

306,  307,  311,  363,  375 
U.  S.  V.  Great  Lakes  Towing  Co.,  208  Fed.  733.  .45,  171,  182, 

227,  231,  238,  252,  273,  282,  290,  296,  310,  379 

U.  S.  V.  Great  Lakes  Towing  Co.,  217  Fed.  656 378,  381 

U.  S.  V.  Greenhut,  50  Fed.  469 325,  341 

U.  S.  V.  Hamburg- Amer.,  etc.,  Gesellshaft,  200  Fed.  806.  .50, 

166,  219 

U.  S.  V.  Hamburg-American  S.  S.  Line,  216  Fed.  971 125 

U.  S.  I'.  International  Harvester  Co.,  214  Fed.  987.  .128,  213, 

214,  228 

U.  S.  V.  Irvine,  98  U.  S.  450 199 

U.  S.  V.  Jellico-iMountain  Coke  &  Coal  Co.,  43  Fed.  898 373 

U.  S.  V.  John  Reardon  &  Sons  Co.,  191  Fed.  454 330 

U.  S.  V.  Joint  Traffic  Association,  171  U.  S.  .505.  .24,  25,  30,  32, 

35,  129,  140,  168,  169,  174,  177,  181 

U.  S.  V.  Kilpatrick,  16  Fed.  765 317 

U.  S.  V.  Kissel,  173  Fed.  823 196 

U.  S.  V.  Kissel  &  Harned,  218  U.  S.  601 197,  198,  336 

U.  S.  V.  MacAndrews  &  Forbes  Co.,  149  Fed.  823.  .204,  210,  215, 

217,  265,  273,  333,  336,  340,  344,  345,  348,  349,  403 

U.  S.  V.  Nelson,  52  Fed.  646 325 

U.  S.  V.  New  Departure  Mfg.  Co.,  204  Fed.  107.  .111,  196,  329, 

335,  525 


xlii  Table  of  Cases 

[References  are  to  sections] 

U.  S.  V.  New  York,  New  Haven  &  Hartford  R.  R.,  165  Fed.  742  389 

U.  S.  V.  Northern  Securities  Co.,  120  Fed.  721 131,  211,  216 

U.  S.  V.  Pacific  &  Artie  Ry.  &  Nav.  Co.,  228  U.  S.  87.  .  .44,  221,  295 

U.  S.  V.  Patten,  187  Fed.  664 276,  *342 

U.  S.  V.  Patten,  226  U.  S.  525 59,  155,  161,  205,  207,  352 

U.  S.  V.  Patterson,  55  Fed.  605 116,   118,  325,  327,  329,  333 

U.  S.  V.  Patterson,  59  Fed.  280 452,  453 

U.  S.  V.  Patterson,  205  Fed.  292 503,  523 

U.  S.  V.  Pattison,  201  Fed.  697 Ill,  196 

U.  S.  V.  Reading  Co.,  226  U.  S.  324.  .56,  152,  163,  289,  293,  303, 

305,  307,  376 

U.  S.  V.  St.  Louis  Terminal,  224  U.  S.  383 83,  303 

U.  S.  V.  Standard  Oil  Co.,  173  Fed.  177.  .23,  130,  135,  139,  147, 

148,  171,  250,  255,  265,  272,  310,  382,  403 
U.  S.  V.  Standard  Oil  Co.  of  New  Jersey,  152  Fed.  290.  .202,  203,  357 

U.  S.  V.  Standard  Sanitary  Mfg.  Co.,  187  Fed.  229 588 

U.  S.  V.  Standard  Sanitary  Mfg.  Co.,  187  Fed.  232 587 

U.  S.  V.  Standard  Sanitary  Mfg.  Co.,  191  Fed.  172,  496,  497,  500,  501 

U.  S.  V.  Swift,  188  Fed.  92 329,  338,  339 

U.  S.  V.  Terminal  R.  Assn.,  154  Fed.  268 561,  562,  565,  572 

U.  S.  V.  Terminal  R.  Assn.  of  St.  Louis,  148  Fed.  486.  .564,  567, 

568,  573 

U.  S.  V.  Terminal  Assn.  of  St.  Louis,  197  Fed.  446 390 

U.  S.  V.  Trans-Missouri  Freight  Assn.,  58  Fed.  58 77,  282 

U.  S.  V.  Union  Pacific  Railroad  Co.,  188  Fed.  102 453 

U.  S.  V.  Union  Pacific  Railroad  Co.,  91  U.  S.  72 118 

U.  S.  V.  Union  Pacific  Railroad  Co.,  226  U.  S.  61 .  .72,  79,  80,  81, 
84,  85,  125,  132,  140,  158,  162,  163,  190,  237,  250,  253,  282, 

378,  380 

U.  S.  ?;.  Virginia-Carolina  Chemical  Co.,  163  Fed.  66 347 

U.  S.  V.  Whiting,  212  Fed.  466.  .56,  125,  133,  257,  316,  321,  322 
U.  S.  V.  Winslow,  195  Fed.  578.  .68,  111,  156,  222,  318,  319,  320, 

323,  330,  337,  343,  350 

U.  S.  V.  Winslow,  227  U.  S.  202 308,  518 

U.  S.  V.  Workingmen's  Amal.  Council,  54  Fed.  994.  .88,  90,  92, 

93,  138,  254,  374 
United  States  Consol.  S.  R.  Co.  v.  Griffin  &  Skelley  Co.,  126 
Fed.  364 516,  521 

Virtue  v.  Creamery  Package  Co.,  227  U.  S.  8 436,  522,  548 


Tablp:  of  Cases  xliii 

[References  are  to  sections) 

Ware-Kramer  Toharro  Co.  ?'.  American  Tobacco  Co.,  178  Fed. 

117.  .  130,  171,  331,  332,  398,  400,  401,  413,  419,  420,  423,  424,  427 
Ware-Kramer   Tobacco   Co.    v.    American    Tobacco   Co.,    180 

Fed.  160 287 

Waterhouse  v.  Comer,  55  Fed.  149 98 

Wheeler-Stenzel  Co.  v.  National  Window  Glass  T.  Assn.,  152 

Fed.  864 12,  16,  154,  404,  442 

Whitwell  V.  Continental  Tobacco  Co.,  125  Fed.  454.  .136,  137, 

140,  169,  269,  294 

Wilson  ».  Sanford,  10  How.  99 529 

Wogan  Bros.  v.  American  Sugar  Refining  Co.,  215  Fed.  273  . . .  355 


MANUAL  OF  THE  SHERMAN 
LAW 

CHAPTER  I 

MONOPOLIES  AND   RESTRAINTS   OF  TRADE  AT  COMMON   LAW 

§  1.  Monopoly  by  Royal  Grant. 

At  common  law  the  term  monopoly  included  only  ex- 
clusive rights  obtained  from  royal  grant  by  the  issuance 
of  letters  patent,  commission  or  otherwise  and  embraced 
not  only  arts,  mysteries  or  the  enlargement  of  new  trades, 
but  also  in  many  instances  ordinary  articles  of  trade  and 
commerce.  It  is,  however,  only  monopoly  in  the  latter 
sense  which  was  early  found  to  be  obnoxious,  and  with 
some  few  exceptions  was  forbidden  by  the  Statute  of 
Monopolies;  so  that  ordinarily  by  monopoly  was  under- 
stood to  mean  such  grants  by  royal  authority  as  were 
thereby  condemned.  It  was  largely  in  this  sense  that  Lord 
Coke  denounced  monopolies  in  the  following  definition : — 

"A  monopoly  is  an  institution  or  allowance  by  the 
King  by  his  grant,  commission,  or  otherwise  to  any  person 
or  persons,  bodies  politic  or  corporate,  or  for  the  sole  buy- 
ing, selling,  making,  working,  or  using  of  anything,  whereby 
any  person  or  persons,  bodies  politic  or  corporate,  are 
sought  to  be  restrained  of  any  freedom  or  liberty  that 
they  had  before  or  hindered  in  their  lawful  trade."  Chap. 
85,  Third  Institute,  181.    See,  4  Blackstone,  pp.  159-160. 

1 


2  Manual  of  the  Sherman  Law 

§  2.  Monopolistic  Grants  in  Time  of  Elizabeth. 

The  prodigality  of  Queen  Elizabeth  in  granting  monop- 
olies both  to  public  functionaries  as  a  reward  for  distin- 
guished services  and  to  members  of  her  household  in  lieu 
of  a  regular  stipend  occasioned  distress  and  oppression 
throughout  her  domain.  The  articles  made  subject  to 
such  system  were  many,  and  included  a  great  many 
articles  in  common  use  such  as  salt,  iron,  powder,  steel, 
vinegar,  oil,  tin,  sulphur,  paper,  etc.  So  exorbitant  were 
these  monopolists  in  their  demands,  that  prices  for  their 
commodities  were  raised  to  an  unconscionable  extent, — 
salt  for  example  being  raised  from  sixteen  pence  a  bushel 
to  fourteen  or  fifteen  shillings.  In  re  Charge  to  Grand  Jury, 
151  Fed.  834,  835-836.    (D.  C— E.  D.  Georgia,  1907.) 

§  3.  Prohibition  of  Monopolies  Granted  by  the  Crown. 

"Notwithstanding  the  objurgations  of  her  subjects, 
Elizabeth,  by  wheedling  and  cajoling  them  in  a  manner 
not  altogether  unfeminine,  succeeded  in  maintaining  the 
monopolies  in  behalf  of  her  favorites,  and  at  the  expense 
of  her  people.  It  was  not  until  the  reign  of  her  successor, 
James  I,  that  relief  to  the  people  was  afforded.  In  the 
first  Parliament  of  this  King,  a  Committee  of  Grievances 
was  appointed,  of  which  Sir  Edward  Coke  was  the  chair- 
man, and  it  is  doubtless  ascribable  to  the  labors  of  this 
great  lawyer  that  the  English  statute  was  enacted,  which 
to  this  day  stands  in  all  its  original  vigor  among  the  laws 
of  England.  Of  this  act  against  monopolies  our  own 
anti-trust  law  is  intended  to  be  the  equivalent,  as  affect- 
ing all  matters  to  which  the  legislative  and  judicial  power 
of  the  United  States  may  extend."  (Speer,  District  Judge.) 
In  re  Charge  to  Grand  Jury,  151  Fed.  834,  837  (D.  C— 
E.  D.  Georgia,  1907).  See  also  Price:  The  English  Patents 
of  Monopoly,  Chaps.  I,  II,  and  III. 


Monopolies  and  Restraints  at  Common  Law     3 

§  4.  Evils  of  Monopolistic  Grants. 

The  evils  of  monopolies  granted  by  the  British  Crown 
which  led  to  their  suspension  were  the  arbitrary  fixing  of 
prices,  the  hmitation  of  production,  and  the  deterioration 
of  quahty.  Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  1,  52 
(1911). 

§  5.  Statutes  against  Forestalling,  Regrating  and  Engrossing. 

In  addition  to  the  Statute  of  MonopoHes,  other  statutes 
were  subsequently  passed  relating  to  offenses  such  as  fore- 
stalling, regrating  and  engrossing  necessaries  of  life,  the 
evils  consequent  thereon  coming  to  be  regarded  as  con- 
stituting a  monopoly  or  an  attempt  to  monopolize.  But 
as  time  went  on,  it  was  declared  by  Parliament  that  the 
acts  prohibited  by  engrossing,  forestalling,  etc.,  did  not 
have  the  harmful  tendency  attributed  to  them,  and  should 
be  considered  as  favorable  to  the  development  of  trade 
rather  than  in  restraint  thereof.  In  1844,  therefore,  these 
later  statutes  were  repealed,  and  thereafter  such  acts,  even 
though  they  actually  resulted  in  monopoly,  were  not  pro- 
hibited. Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  1,  52-55 
(1911).  See  also  The  King  v.  Waddington,  1  East,  143; 
Russell:  The  Law  of  Crimes  (7th  Ed.  Canada),  Vol.  II, 
Chap.  9,  pages  1919-1920;  Bishop's  New  Criminal  Law 
(8th  Ed.),  Sect.  518,  et  seq. 

§  6.  Term  Monopoly  to  be  Applied  to  Result. 

In  this  country,  as  has  been  the  case  in  England,  the 
acts  from  which  it  was  deemed  there  resulted  a  part  if  not 
all  of  the  injurious  consequences  ascribed  to  monopoly, 
came  to  be  referred  to  as  a  monopoly  itself;  that  is,  atten- 
tion has  been  directed  not  to  the  correct  name  to  be  given 
to  the  conditions  or  acts  which  gave  rise  to  a  harmful  re- 
sult, but  to  the  result  itself  and  to  the  remedying  of  the 


4  jSIanual  of  the  Sherman  Law 

evils  which  it  produced.    Standard  Oil  Co.  v.  U.  S.,  221 
U.  S.  1,  56  (1911). 

§  7.  State  Constitution  and  Statutes. 

The  efforts  of  the  people  of  this  coiintn'^  to  protect  them- 
selves against  the  injurious  results  of  the  monopoly  have 
lasted  for  many  years.  This  is  true  of  the  constitutional 
law  of  many  of  the  states  as  well  as  statutory  law.  These 
provisions  have  been  usually  held  to  be  merely  declaratory 
of  the  common  law.  Ir  re  Charge  to  Grand  Jury,  151  Fed. 
834,  835.    (D.  C— E.  D.  Georgia,  1907.) 

§  8.  Unobstructed  Course  of  Trade. 

"  There  is  no  doubt  that  (to  quote  from  the  well-known 
work  of  Chief  Justice  Erie  on  Trade  Unions)  'at  common 
law  every  person  has  individually,  and  the  public  also  has 
collectively,  a  right  to  require  that  the  course  of  trade 
should  be  kept  from  unreasonable  obstruction.'"  {Mr. 
Chief  Justice  Fuller.)  Loewe  v.  Lawlor,  208  U.  S.  274, 
294-296  (1908). 

§  9.  Objection  to  Voluntary  Restraints. 

"From  early  times  it  was  the  policy  of  Englishmen  to 
encourage  trade  in  England,  and  to  discourage  those  vol- 
untary restraints  which  tradesmen  were  often  induced  to 
impose  on  themselves  by  contract.  Courts  recognized 
this  public  policy  by  refusing  to  enforce  stipulations  of 
this  character.  The  objections  to  such  restraints  were 
mainly  two.  One  was  that  by  such  contracts  a  man  dis- 
abled himself  from  earning  a  livehhood  with  the  risk  of 
becoming  a  public  charge,  and  deprived  the  community 
of  the  benefit  of  his  labor.  The  other  was  that  such  re- 
straints tended  to  give  to  the  covenantee,  the  beneficiary 
of  such  restraints,  a  monopoly  of  the  trade,  from  which  he 


Monopolies  and  Restraints  at  Common  Law     5 

had  thus  excluded  one  competitor,  and  by  the  same  means 
might  exckide  others."  (Taft,  Circuit  Judge.)  U.  S.  v. 
Addyston  Pipe  &  Steel  Co.,  85  Fed.  271,  279.  (C.  C.  A. 
Sixth  Circuit,  1898.) 

§  10.  Unreasonableness  of  Restraint  of  Trade. 

"The  unreasonableness  of  contracts  in  restraint  of  trade 
and  business  is  very  apparent  from  several  obvious  con- 
siderations: (1)  Such  contracts  injure  the  parties  making 
them,  because  they  diminish  their  means  of  procuring  live- 
lihoods and  a  competency  for  their  families.  They  tempt 
improvident  persons,  for  the  sake  of  present  gain,  to  de- 
prive themselves  of  the  power  to  make  future  acquisitions ; 
and  they  expose  such  persons  to  imposition  and  oppression. 

(2)  They  tend  to  deprive  the  public  of  the  services  of  men 
in  the  employments  and  capacities  in  which  they  may  be 
most  useful  to  the  community  as  well  as  themselves. 

(3)  They  discourage  industry  and  enterprise,  and  diminish 
the  products  of  ingenuity  and  skill.  (4)  They  prevent 
competition  and  enhance  prices.  (5)  They  expose  the 
public  to  all  the  evils  of  monopoly."  {Mr.  Justice  Mor- 
ton.) Alger  v.  Thacher,  19  Pick.  51,  54,  quoted  by  Taft, 
Circuit  Judge,  in  U.  S.  v.  Addyston  Pipe  &  Steel  Co.,  85 
Fed.  271,  280.    (C.  C.  A.  Sixth  Circuit,  1898.) 

§  11.  Partial  Restraint  Generally  Valid. 

At  common  law  covenants  in  partial  restraint  of  trade 
are  generally  upheld  as  valid  when  they  are  agreements 
"  (1)  by  the  seller  of  property  or  business  not  to  compete 
with  the  buyer  in  such  a  way  as  to  derogate  from  the  value 
of  the  property  or  business  sold ;  (2)  by  a  retiring  partner 
not  to  compete  with  the  firm;  (3)  by  a  partner  pending  the 
partnership  not  to  do  anything  to  interfere,  by  competi- 
tion or  otherwise,  with  the  business  of  the  firm;  (4)  by  the 


6  Manual  of  the  Sherman  Law 

buyer  of  the  property  not  to  use  the  same  in  competition 
with  the  business  retained  by  the  seller;  and  (5)  by  an  as- 
sistant, servant,  or  agent  not  to  compete  with  his  master 
or  employer  after  the  expiration  of  his  time  of  service." 
(Taft,  Circuit  Judge.)  U.  S.  v.  Addyston  Pipe  &  Steel 
Co.,  85  Fed.  271,  282,    (C.  C.  A.  Sixth  Circuit,  1898.) 

§  12.  Contract  in  Restraint  Illegal  Because  Unenforceable. 

At  common  law,  agreements  in  restraint  of  trade  were 
not  unlawful  in  the  sense  that  a  civil  action  could  be  predi- 
cated thereon,  but  were  only  illegal  in  the  sense  of  being 
unenforceable.  W heeler- Sienzel  Co.  v.  A^at'l  Wi7idow  Glass 
T.  Ass'n,  152  Fed.  864,  873  (C.  C.  A.  Third  Circuit, 
1907);  Mogul  Steamship  Co.  v.  McGregor,  L.  R.  App.  Cas. 
(1892)  25;  U.  S.  v.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271, 
279.    (C.  C.  A.  Sixth  Circuit,  1898.) 

§  13.  Mogul  Steamship  Company  Case. 

While  the  celebrated  case  of  Mogul  Steamship  Co.  v. 
McGregor  was  not  finally  decided  by  the  House  of  Lords 
until  1892,  or  shortly  after  the  passage  of  the  Sherman 
Anti-Trust  Act,  it  serves  reflexly  to  show  the  exact  state 
of  the  law  in  England  at  the  time  such  statute  was  enacted. 
Here  damages  were  sought  from  a  coml)ination  of  com- 
panies engaged  in  the  tea  carrying  trade  at  Hankow,  China, 
who  conspired  to  drive  the  plaintiff  out  of  business  and 
to  obtain  a  monopol}^  of  the  trade.  This  case  illustrates 
very  clearly  the  proposition  that  at  common  law  no  action 
for  damages  could  be  maintained  for  injuries  resulting 
from  any  conspiracy,  contract  or  other  means  of  restrain- 
ing trade  unless  such  conspiracy,  contract  or  means  were 
indictable,  notwithstanding  the  fact  that  such  restraints 
were  legally  unenforceable.  In  some  instances,  however, 
this  case  has  been  referred  to  as  an  example  of  a  combina- 


Monopolies  and  Restraints  at  Common  Law     7 

tion  which  was  held  to  be  reasonable  at  common  law,  but 
■  certainly  the  decision  does  not  go  so  far  as  this,  both  Lord 
Bramwell  and  Lord  Hannen  distinctly  pointing  out  that 
the  contract  of  association  was  void  and  unenforceable 
because  in  restraint  of  trade  though  not  supporting  an 
action  for  affirmative  relief.  U.  S.  v.  Addyston  Pipe  & 
Steel  Co.,  85  Fed.  271,  280.    (C.  C.  A.  Sixth  Circuit,  1898.) 

§  14.  Restraint  Lawful  if  Ancillary  in  Character. 

Originally  all  contracts  in  restraint  of  trade  were  pro- 
hibited, but  this  doctrine  was  modified  so  as  to  permit  re- 
straints by  contract  which  were  partial  as  to  territory  or 
time  and  were  otherwise  reasonable.  In  modern  times  as 
new  conditions  arose,  the  trend  of  legislation  and  judicial 
decision  has  come  more  and  more  to  adapt  the  recognized 
restrictions  to  such  conditions  to  the  extent  of  considering 
whether  the  restraint  were  only  such  as  to  afford  a  fair 
protection  to  the  interests  of  the  party  in  whose  favor  it 
was  given  and  not  too  large  as  to  interfere  with  the  in- 
terests of  the  public.  "Without  going  into  detail,  and 
but  very  briefly  surveying  the  whole  field,  it  may  be  with 
accuracy  said  that  the  dread  of  enhancement  of  prices  and 
of  other  wrongs  which  it  was  thought  would  flow  from 
the  undue  limitation  on  competitive  conditions  caused  by 
contracts  or  other  acts  of  individuals  or  corporations  led, 
as  a  m.atter  of  public  policy,  to  the  prohibition  or  treating 
as  illegal  all  contracts  or  acts  which  were  unreasonably 
restrictive  of  competitive  conditions,  either  from  the  na- 
ture or  character  of  the  contract  or  act  or  where  the  sur- 
rounding circumstances  were  such  as  to  justify  the  con- 
clusion that  they  had  not  been  entered  into  or  performed 
with  the  legitimate  purpose  of  reasonably  forwarding 
personal  interest  and  d(>veloping  trade,  but,  on  the  con- 
trary, were  of  such  a  character  as  to  give  rise  to  the  in- 


8  Manual  of  the  Sherman  Law 

ference  or  presumption  that  they  had  been  entered  into  or 
done  with  the  intent  to  do  wrong  to  the  general  public 
and  to  limit  the  right  of  individuals,  thus  restraining  the 
free  flow  of  commerce  and  tending  to  bring  about  the  evils, 
such  as  enhancement  of  prices,  which  were  considered  to 
be  against  public  policy."  {Mr.  Chief  Justice  White.) 
Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  1,  5S  (1911). 

The  ancillary  character  of  valid  restraints  at  common 
law  is  well  brought  out  by  Ex-President  Taft  in  his  recent 
monograph  on  the  Sherman  Law  in  which  he  emphasizes 
the  view  that  contracts  in  which  the  restraint  of  trade 
appears  to  be  the  chief  object  were  unreasonable  and  il- 
legal, but  where  the  restraint  was  merely  subsidiary  and 
contributing  to  the  main  and  lawful  purpose  of  the  con- 
tract the  said  restraint  was  held  to  be  reasonable  and 
legal.  Ex-President  Toft:  "The  Anti-Trust  Act,"  etc., 
page  12. 

§  16.  Restraints  of  Contracting  Parties  and  Third  Persons. 

It  is  also  suggested  by  the  same  eminent  text  writer 
above  mentioned  that  the  test  of  reasonableness  was 
limited  at  common  law  solely  to  those  cases  where  the  re- 
straint was  brought  about  through  the  curtailment  of 
trade  rights  of  a  contracting  part}^  and  was  never  applied 
to  contracts  where  the  restraint  was  of  person  or  persons 
not  parties  to  the  contract,  which  contracts  were  always 
void  and  unenforceable.  Ex-President  Taft:  "  The  Anti- 
Trust  Act,"  etc.,  page  15. 

§  16.  Combinations  Constituting  a  Public  Wrong. 

At  common  law  where  combinations  were  illegal  in  the 
strict  sense  of  the  word  and  constituted  a  public  wrong, 
one  who  incurred  substantial  loss  thereby  suffered  a  legal 
injury  for  which  a  private  action  would  lie.     Wheeler- 


Monopolies  and  Restraints  at  Common  Law     9 

Stenzel  Co.  v.  Nat'l  Window  Glass  T.  Ass'n,  152  Fed.  Rep. 
864,  873.    (C.  C.  A.  Third  Circuit,  1907.) 

The  general  doctrine  is  that  at  common  law  no  matter 
"how  harmful  to  others  individual  or  combined  action 
may  be,  if  it  is  not  unlawful,  the  damage  or  harm  so  in- 
flicted does  not  constitute  legal  injury."  (Gray,  Circuit 
Judge.)  Wheeler-Stenzel  Co.  v.  Nat.  Window  Glass  T. 
Ass'n,  152  Fed.  864,  873.    (C.  C.  A.  Third  Circuit,  1907.) 

§  17.  Restraint  as  Affecting  Value  of  Matter  Sold. 

"The  underlying  principle  upon  which  the  modern  cases 
upon  this  subject  are  grounded  is  that  although  one  can- 
not stifle  competition  by  a  bargain  having  that  purpose 
only,  yet  when  he  purchases  something  or  acquires  some 
right,  the  value  of  which  may  be  affected  by  the  subse- 
quent conduct  of  the  seller,  the  purchaser  may  lawfully 
obtain  the  stipulation  of  the  seller  that  he  will  refrain  from 
such  conduct."  (Severens,  Circuit  Judge.)  Jarvis  v. 
Knavv,  121  Fed.  34,  39.     (C.  C.  A.  Sixth  Circuit,  1903.) 

§  18.  Restraint  Cannot  Run  with  the  Article  Sold. 

It  is  "a  general  rule  of  the  common  law  that  a  contract 
restricting  the  use  or  controlling  sub-sales  cannot  be  an- 
nexed to  a  chattel  so  as  to  follow  the  article  and  obligate 
the  sub-purchaser  by  mere  notice.  A  covenant  which  may 
be  valid  and  run  with  the  land  will  not  run  or  attach  itself 
to  a  mere  chattel."  (Lurton,  Circuit  Judge.)  John  D. 
Park  &  Sons  Co.  v.  Hartman,  153  Fed.  24,  39.  (C.  C.  A. 
Sixth  Circuit,  1907.) 


CHAPTER  II 

CONGRESS   AND    ITS    RELATION    TO   THE   ACT 

§  19.  Course  of  the  Act  Through  Congress. 

The  original  Ijill  was  introducetl  by  John  Sherman  in 
the  Senate  on  Dec.  4,  1889.  After  various  vicissitudes  it 
was  March  27,  1890,  referred  with  amendments,  proposed 
or  adopted,  to  the  Committee  on  Judiciary,  through  Sena- 
tor Edmunds,  who  on  April  2,  1890,  reported  back  the 
same  together  with  a  substitute  which  had  been  drawn  by 
them.  The  substitute  bill  was  identical  with  the  present 
statute,  it  having  passed  both  houses  of  Congress  un- 
changed, and  having  been  approved  and  signed  by  Presi- 
dent Harrison,  July  2,  1890.  Walker's  History  of  the  Sher- 
man Law,  Chaps.  I  and  II. 

§  20.  Power  of  Congress  to  Enact  Statute. 

"  The  law  finds  its  authority  in  the  power  of  Congress 
granted  by  the  Constitution  to  regulate  commerce  with 
foreign  nations  and  among  the  several  states.  *  The  power 
to  regulate,'  said  Mr.  Justice  Harlan,  in  his  dissenting 
opinion,  in  United  States  v.  E.  C.  Knight  Co.,  156  U.  S.  20, 
15  Sup.  Ct.  249,  39  L.  Ed.  325,  'is  the  power  to  prescribe 
the  rule  by  which  the  subject  regulated  is  to  be  governed. 
It  is  one  that  must  be  exercised,  whenever  necessary, 
through  the  territorial  limits  of  the  several  states.'  " 
(Speer,  District  Judge.)  In  re  Charge  to  Grand  Jury,  151 
Fed.  834,  837-838.     (D.  C— E.  D.  Georgia,  1907.) 

"Under  its  power  to  regulate  commerce  among  the 

10 


Congress  and  its  Relation  to  the  Act        11 

several  States  and  with  foreign  nations,  Congress  had 
authority  to  enact  the  statute  in  question."  (Mr.  Justice 
Harlan.)  No.  Securities  Co.  v.  U.  S.,  193  U.  S.  197,  332 
(1904). 

"Congress  has  the  power  to  estabhsh  rules  by  which 
interstate  and  international  commerce  shall  be  governed, 
and,  by  the  Anti-Trust  Act  has  prescribed  the  rule  of  free 
competition  among  those  engaged  in  such  commerce." 
{Mr.  Justice  Harlan.)  No.  Securities  Co.  v.  U.  S.,  193 
U.  S.  197,  331  (1904). 

§  21.  Power  is  Complete  in  Itself. 

"Again  and  again  this  court  has  reaffirmed  the  doctrine 
announced  in  the  great  judgment  rendered  by  Chief  Jus- 
tice Marshall  for  the  court  in  Gibbons  v.  Ogden,  9  Wheat. 
1,  196,  197,  that  the  power  of  Congress  to  regulate  com- 
merce among  the  States  and  with  foreign  nations  is  the 
power,  'to  prescribe  the  rule  by  which  commerce  is  to  be 
governed,'  that  such  power  'is  complete  in  itself,  may  be 
exercised  to  its  utmost  extent,  and  acknowledges  no  limita- 
tions other  than  are  prescribed  in  the  Constitution.' "  {Mr. 
Justice  Harlan.)  No.  Securities  Co.  v.  U.  S.,  193  U.  S. 
197,  335-336  (1904). 

§  22.  Power  to  Regulate  Commerce  is  Plenary. 

"By  the  constitution  of  the  United  States,  Congress  is 
given  plenary  power  to  regulate  commerce  between  the 
states  and  with  foreign  nations.  In  the  exercise  of  this 
power,  Congress  may  prevent  interference  by  the  states 
with  the  freedom  of  interstate  commerce,  and  may  likewise 
pi:ohibit  individuals,  bj'  contract  or  otherwise,  from  im- 
peding the  free  and  untrammeled  flow  of  such  trade." 
(Day,  Circuit  Judge.)  Chesapeake  &  0.  Fuel  Co.  v.  U.  S., 
115  Fed.  610,  619.    (C.  C.  A.  Sixth  Circuit,  1902.) 


12  Manual  of  the  Sherman  Law 

§  23.  Congress  has  Plenary  Power  to  Restrict  Every  Instru- 
mentality. 

"Congress  has  plenary  and  indisputable  power  under 
the  commercial  clause  of  the  Constitution  to  restrict  and 
regulate  the  use  of  everj'^  instrumentality  employed  in 
interstate  or  international  commerce,  so  far  as  it  may  be 
necessary  to  do  so  in  order  to  prevent  the  restraint  thereof 
denounced  by  the  Act."  (Sanborn,  Circuit  Judge.) 
U.  S.  V.  Standard  Oil  Co.,  173  Fed.  177,  187.  (C.  C— E.  D. 
Missouri,  1909.) 

§  24.  Combination  of  Powerful  Corporations. 

"It  is  the  combination  of  these  large  and  powerful  cor- 
porations, covering  vast  sections  of  territory  and  in- 
fluencing trade  throughout  the  whole  extent  thereof,  and 
acting  as  one  body  in  all  the  matters  over  which  the  com- 
bination extends,  that  constitutes  the  alleged  evil,  and 
in  regard  to  which,  so  far  as  the  combination  operates 
upon  and  restrains  interstate  commerce,  Congress  has 
power  to  legislate  and  to  prohibit."  (Mr.  Justice  Peck- 
ham.)  U.  S.  V.  Joint  7'raffic  Association,  171  U.  S.  505, 
571  (1898). 

§  25.  Combination  of  Railroads  to  Establish  Rates. 

"Congress  in  the  exercise  of  its  right  to  regulate  com- 
merce among  the  several  states,  or  otherwise,  has  the 
power  to  prohibit,  as  in  restraint  of  interstate  commerce, 
a  contract  or  combination  between  competing  railroad 
corporations  entered  into  and  formed  for  the  purpose  of 
establishing  and  maintaining  interstate  rates  and  fares 
for  the  transportation  of  freight  and  passengers  on 
any  of  the  railroads  parties  to  the  contract  or  com- 
bination, even  though  the  rates  and  fares  thus  (\s- 
tablished    are    reasonaljle."       (Mr.    Justice    Peckham.) 


Congress  and  its  K elation  to  the  Act        13 

U.  S.  V.  Joint  Traffic  Association,   171   U.  S.   505,  5(58- 
569  (1898). 

§  26.  Congress  Cannot  Regulate  Intrastate  Commerce. 

"While  the  constitution  confers  upon  Congress  the 
power  '  to  dispose  of  and  make  all  needful  rules  and  regu- 
lations respecting  the  territory  or  other  property'  of  the 
United  States,'  and  'to  regulate  commerce  with  foreign 
nations  and  among  the  several  states  and  with  the  Indian 
tribes/  it  does  not  confer  upon  it  the  power  to  regulate 
trade  or  commerce  within  a  state,  or  to  legislate  in  respect 
thereto."  (Riner,  District  Judge.)  Moore  v.  U.  S.,  85 
Fed.  465,  467.    (C.  C.  A.  Eighth  Circuit,  1898.) 

§  27.  A  State  Cannot  Obstruct  Interstate  Commerce. 

"The  uniform  course  of  decision  has  been  to  declare 
that  it  is  not  within  the  competency  of  a  State  to  legislate 
in  such  a  manner  as  to  obstruct  interstate  commerce. 
If  a  State,  with  its  recognized  power  of  sovereignty,  is  im- 
potent to  obstruct  interstate  commerce,  can  it  be  that  any 
mere  voluntary  association  of  individuals  within  the  limits 
of  that  State  has  a  power  which  the  State  itself  does  not 
possess?"  (Mr.  Justice  Brewer.)  In  re  Debs,  158  U.  S. 
564,  580  (1895);  Addyston  Pipe  &  Steel  Co.  v.  U.  S.,  175 
U.  S.  211,  2.30  (1899). 

"All  will  agree  that  the  Constitution  and  the  legal  en- 
actments of  Congress  are,  by  express  words  of  the  Con- 
stitution the  supreme  law  of  the  land,  anything  in  the 
Constitution  and  laws  of  any  State  to  the  contrary  not- 
withstanding." (Air.  Justice  Harlan.)  No.  Securities 
Co.  V.  U.  S.,  193  U.  S.  197,  344  (1904). 

§  28.  No  Corporation  can  Restrain  Interstate  Commerce  by 
State  Authority. 
"No  State  can  endow  any  of  its  corporations,  or  any 


14  Manual  of  the  Sherman  La\y 

combination  of  its  citizens,  with  authority  to  restrain  in- 
terstate or  international  commerce,  or  to  disobey  the 
national  will  as  manifested  in  legal  enactments  of  Con- 
gress." {Mr.  Justice  Harlan.)  No.  Securities  Co.  v. 
U.  S.,  193  U.  S.  197,  350  (1904). 

"No  State  can,  by  merely  creating  a  corporation,  or 
in  any  other  mode,  project  its  authority  into  other  States, 
and  across  the  continent,  so  as  to  prevent  Congress  from 
exerting  the  power  it  possesses  under  the  Constitution 
over  interstate  and  international  commerce,  or  so  as  to 
exempt  its  corporation  engaged  in  interstate  commerce 
from  obedience  to  any  rule  lawfully  established  by  Con- 
gress for  such  commerce.  It  cannot  be  said  that  any 
State  may  give  a  corporation,  created  under  its  laws,  au- 
thority to  restrain  interstate  or  international  commerce 
against  the  w^ll  of  the  nation  as  lawfully  expressed  by  Con- 
gress." {Mr.  Justice  Harlan.)  No.  Securities  Co.  v. 
U.  S.,  193  U.  S.  197,  345,  346  (1904). 

"Congress  may  protect  the  freedom  of  interstate  com- 
merce by  any  means  that  are  appropriate  and  that  are 
lawful  and  not  prohibited  by  the  Constitution.  .  .  .  No 
state  corporation  can  stand  in  the  way  of  the  enforcement 
of  the  national  will,  legally  expressed."  {Mr.  Justice 
Harlan.)  No.  Securities  Co.  v.  U.  S.,  193  U.  S.  197,  334- 
335  (1904). 

§  29.  Constitutionality  of  State  Enactment. 

"  In  other  words,  if  a  claim  is  made  in  the  Circuit  Court, 
no  matter  by  which  party,  that  a  state  enactment  is  in- 
valid under  the  Constitution  of  the  United  States,  and 
that  claim  is  sustained  or  rejected,  then  it  is  consistent 
with  the  words  of  the  act,  and,  we  think,  in  harmony  with 
its  object,  that  this  court  review  the  judgment  at  the  in- 
stance of  the  unsuccessful  party,  whether  plaintiff  or  de- 


Congress  and  its  Relation  to  the  Act        15 

fendant.  It  was  the  purpose  of  Congress  to  give  oppor- 
tunity to  an  unsuccessful  litigant  to  come  to  this  court 
directly  from  the  Circuit  Court  in  everj^  case  in  which  a 
claim  is  made  that  a  state  statute  is  in  contravention  of 
the  Constitution  of  the  United  States."  (Mr.  Justice 
Harlan.)  Loeb  v.  Columbia  Township  Trustees,  179  U.  S. 
472,  478  (1900);  Connolly  v.  Union  Sewer  Pipe  Co.,  184 
U.  S.  540,  544  (1902). 

§  30.  Power  of  Congress  not  Unlimited. 

"The  power  to  regulate  commerce  has  no  limitation 
other  than  those  prescribed  in  the  Constitution.  The 
power,  however,  does  not  carry  with  it  the  right  to  destroy 
or  impair  those  limitations  and  guarantees  Avhich  are  also 
placed  in  the  Constitution  or  in  any  of  the  amendments 
to  that  instrument."  (Mr.  Justice  Peckham.)  U.  S.  v. 
Joint  Traffic  Association,  171  U.  S.  505,  571  (1898). 

§  31.  Private  Contracts  not  Excluded. 

"  The  power  to  regulate  interstate  commerce  is,  as 
stated  by  Chief  Justice  Marshall,  full  and  complete  in 
Congress,  and  there  is  no  limitation  in  the  grant  of  the 
power  which  excludes  private  contracts  of  the  nature  in 
question  from  the  jurisdiction  of  that  body."  (Mr.  Justice 
Peckham.)  Addyston  Pipe  &  Steel  Co.  v.  U.  S.,  175  U.  S. 
211,  228  (1899). 

§  32.  Contracts  Extinguishing  Competition. 

The  power  of  Congress  to  regulate  commerce  extends 
at  least  to  the  prohibition  of  contracts  relating  to  inter- 
state commerce,  which  would  extinguish  all  competition 
between  otherwise  competing  railroad  corporations  doing 
business  in  several  states,  and  which  would  in  that  way 
restrain  interstate  trade  or  commerce.  U.  S.  v.  Joint 
Traffic  Association,  171  U.  S.  505,  570  (1898). 


16  Manual  of  the  Sherman  Law 

"The  Constitutional  guarantee  of  libertj^  of  contract 
does  not  prevent  Congress  from  prescri})ing  the  rule  of  free 
competition  for  those  engaged  in  interstate  and  interna- 
tional commerce."  {Mr.  Justice  Harlan.)  No.  Securities 
Co.  V.  U.  S.,  193  U.  S.  197,  332  (1904). 

§  33.  Right  of  Contract  Subordinate  to  Law. 

"Liberty  of  contract  does  not  imply  liberty  in  a  cor- 
poration or  individuals  to  defy  the  national  will,  when 
legally  expressed.  Nor  does  the  enforcement  of  a  legal 
enactment  of  Congress  infringe,  in  any  proper  sense,  the 
general  inherent  right  of  every  one  to  acquire  and  hold 
property.  That  right,  like  all  other  rights,  must  be  exer- 
cised in  subordination  to  the  law."  (Mr.  Justice  Harlan.) 
No.  Securities  Co.  v.  U.  S.,  193  U.  S.  197,  351  (1904). 

§  34.  Constitutional  Right  of  Contract  Limited  by  Commerce 
Clause. 
"We  think  the  provision  regarding  the  lil)erty  of  the 
citizen  is,  to  some  extent,  limited  by  the  commerce  clause 
of  the  Constitution,  and  that  the  power  of  Congress  to 
regulate  interstate  commerce  comprises  the  right  to  enact 
a  law  prohibiting  the  citizen  from  entering  into  those 
private  contracts  which  directly  and  substantially,  and 
not  merely  indirectly,  remotely,  incidentalh^,  and  col- 
laterally, regulate  to  a  greater  or  less  degree  commerce 
among  the  States."  {Mr.  Justice  Peckham.)  Addyston 
Five  &  Steel  Co.  v.  U.  S.,  175  U.  S.  211,  229  (1899). 

§  35.  Legitimate  Regulation  of  Contracts. 

"Notwithstanding  the  general  liberty  of  contract  which 
is  possessed  by  the  citizen  under  the  Constitution,  wo  find 
that  there  are  many  kinds  of  contracts  which,  while  not 
in  themselves  immoral  or  mala  in  se,  may  yet  be  prohibited 


Congress  and  its  Relation  to  the  Act        17 

by  the  legislation  of  the  States  or,  in  certain  cases,  by  Con- 
gress. The  question  comes  back  whether  the  statute 
under  review  is  a  legitimate  exercise  of  the  power  of  Con- 
gress over  interstate  commerce  and  a  valid  regulation 
thereof."  (Mr.  Justice  Peckham.)  U.  S.  v.  Joint  Traffic 
Association,  171  U.  S.  505,  572,  573  (1898). 

Congress  may  restrain  individuals  from  making  con- 
tracts under  certain  circumstances  and  upon  certain  sub- 
jects. Frisbie  v.  U.  S.,  157  U.  S.  160,  165-166  (1895); 
U.  S.  V.  Joint  Traffic  Association,  171  U.  S.  505,  572  (1898). 


CHAPTER  III 

MEANING    OF    THE    WORDS    "INTERSTATE    COMMERCE"    OR 
COMMERCE    AND    TRADE   AMONG   THE    SEVERAL   STATES 

§  36.  Act  Includes  Both  Trade  and  Commerce. 

"When  the  act  prohibits  contracts  in  restraint  of  trade 
or  commerce,  the  plain  meaning  of  the  language  used  in- 
cludes contracts  which  relate  to  either  or  both  subjects. 
Both  trade  and  commerce  are  included  so  long  as  each  re- 
lates to  that  which  is  interstate  or  foreign."  {Mr.  Justice 
Peckham.)  U.  S.  v.  Freight  Assn.,  166  U.  S.  290,  325 
(1897). 

§  37.  Interstate  or  Foreign  Commerce  must  be  Involved. 

In  order  to  bring  a  combination  within  the  interdiction 
of  the  act,  it  must  appear  that  it  is  more  than  a  mere  com- 
bination in  restraint  of  trade;  it  must  involve  the  restraint 
of  interstate  or  international  commerce.  Gihhs  v.  M'Nee- 
ley,  118  Fed.  120,  123  (C.  C.  A.  Ninth  Circuit,  1902); 
Dueher  Watch  Case  Mfg.  Co.  v.  Howard  Watch  Co.,  66  Fed. 
637,  642.    (C.  C.  A.  Second  Circuit,  1895.) 

§  38.  Interstate  Commerce  Defined. 

'"Commerce,  undoubtedly,  is  traffic,'  said  Chief  Jus- 
tice Marshall,  'but  it  is  something  more;  it  is  intercourse. 
It  describes  the  commercial  intercourse  between  nations 
and  parts  of  nations  in  all  its  branches,  and  is  regulated  by 
prescribing  rules  for  carrying  on  that  intercourse.'  That 
which  belongs  to  commerce  is  within  the  jurisdiction  of 

18 


Meaning  of  "Interstate  Commerce"  19 

the  United  States,  but  that  which  does  not  belong  to  com- 
merce is  within  the  jurisdiction  of  the  pohcc  power  of  the 
State.  Gibbons  v.  Ogden,  9  Wheat.  1,  189,  210;  Brown  v. 
Maryland,  12  Wheat.  419,  448;  The  License  Cases,  5  How. 
504,  599;  Mobile  v.  Kimball,  102  U.  S.  691;  Bowman  v. 
Chicago  &  N.  W.  Railway,  125  U.  S.  465;  Leisy  v.  Hardin, 
135  U.  S.  100;  In  re  Rahrer,  140  U.  S.  545,  555."  (Mr. 
Chief  Justice  Fuller.)  U.  S.  v.  E.  C.  Knight  Company, 
156  U.  S.  1,  12  (1895). 

"  Commerce  among  the  states,  within  the  exclusive  regu- 
lating power  of  congress,  'consists  of  intercourse  and 
traffic  between  their  citizens,  and  includes  the  transporta- 
tion of  persons  and  property,  as  well  as  the  purchase,  sale 
and  exchange  of  commodities.'  County  of  Mobile  v.  Kim- 
ball, 102  U.  S.  691,  702;  Gloucester  Ferry  Co.  v.  Pennsijl- 
vania,  114  U.  S.  203,  5  Sup.  Ct.  Rep.  826."  (Jack- 
son, Circuit  Judge.)  In  re  Greene,  52  Fed.  104,  113. 
(C.  C— S.  D.  Ohio,  W.  D.  1892.) 

Commerce,'  in  its  simplest  signification,  means  the 
exchange  of  goods,  but  with  the  advancing  complexity  of 
civilization  it  is  now  certainly  significant,  not  only  of  ex- 
change, but  of  the  buying  and  selling  of  commodities,  and 
especially  of  the  exchange  of  merchandise  on  a  large  scale. 
It  maj'  be  said  to  be  trade,  traffic,  or  exchange  between 
different  places  and  communities."  (Speer,  District 
Judge.)  In  re  Charge  to  Grand  Jury,  151  Fed.  834,  838- 
839.    (D.  C— E.  D.  Georgia,  1907.) 

§  39.  Meaning  of  Commerce  as  Used  in  the  Clayton  Act. 

"Commerce,"  as  used  in  the  Ciaj'ton  Act,  means  "trade 
or  commerce  among  the  several  States  and  with  foreign 
nations,  or  between  the  District  of  Columbia  or  any  terri- 
tory of  the  United  States  and  any  State,  Territory  or 
foreign  nation,  or  between  any  insular  possessions  or  other 


20  Manual  of  the  Sherman  Law 

places  under  the  jurisdiction  of  the  United  States,  or 
between  any  such  possession  or  place  and  any  State  or 
Territory  of  the  United  States,  or  the  District  of  Columbia 
or  any  foreign  nation,  or  within  the  District  of  Columbia 
or  any  territory  or  anj^  insular  possession  or  other  place 
under  the  jurisdiction  of  the  United  States:  Provided, 
That  nothing  in  this  Act  contained  shall  apply  to  the 
Philippine  Islands."  Clayton  Act  (Act  of  Oct.  15,  1914), 
Sect.  1. 

§  40.  Trade  Defined. 

"'Trade'  lias  been  defined  as  'the  exchange  of  com- 
modities for  other  commodities  or  for  money;  the  business 
of  buying  and  selling;  dealing  liy  way  of  sale  or  exchange.' 
The  word  'commerce,'  as  used  in  the  statute  and  under 
the  terms  of  the  constitution,  has,  however,  a  broader 
meaning  than  the  word  'trade.'  "  (Morrow,  District 
Judge.)  In  re  Grand  Jury,  62  Fed.  840,  841.  (D.  C— 
N.  D.  California,  1894);  U.  S.  v.  Cassidy,  67  Fed.  698, 
705  (D.  C— N.  D.  California,  1895);  U.  S.  v.  Coal  Dealers' 
Assn.,  85  Fed.  252,  265.    (C.  C— N.  D.  California,  1898.) 

"In  its  general  sense,  trade  comprehends  every  species 
of  exchange  or  dealing,  but  its  chief  use  is  'to  denote  the 
barter  or  purchase  and  sale  of  goods,  wares,  and  mer- 
chandise, either  by  wholesale  or  retail,'  and  so  it  is  used  in 
the  ])hrase  mentioned."  (Woods,  Ciradt  Judge.)  U.  S. 
V.  Debs,  64  Fed.  724,  749.    (C.  C— N.  D.  Illinois,  1894.) 

§  41.  Scope  of  Interstate  Trade  and  Commerce. 

Interstate  commerce  is  a  term  of  vcny  larg(^  significance. 
"  It  comprehends,  as  it  is  said,  intercourse  for  the  purposes 
of  trade  in  any  and  all  its  forms,  including  transportation, 
purchase,  sale  and  exchange  of  commodities  between  the 
citizens  of  different  States,  and  the  power  to  regulate  it 


Meaning  of  "Interstate  Commerce"  21 

embraces  all  the  instruments  l^y  which  such  commerce 
may  be  conducted."  {Mr.  Justice  Peckiiam.)  Hopkins 
V.  U.  S.,  171  U.  S.  578,  597  (1898). 

§  42.  Purchase,  Sale  and  Transportation  of  Commodities. 

"Transportation  of  commodities  among  the  several 
states  or  with  foreign  nations  falls  within  the  description 
of  the  words  of  the  statute  with  regard  to  that  subject, 
and  there  is  also  included  in  that  language  that  kind  of 
trade  in  commodities  among  the  States  or  with  foreign 
nations  which  is  not  confined  to  their  mere  transportation. 
It  includes  their  purchase  and  sale."  (Mr.  Justice  Peck- 
ham.)     [/.  S.  V.  Freight  Assn.,  166  U.  S.  290,  325  (1897). 

"The  act  in  question  has  relation  only  to  commodities, 
and  possiblj^  to  jiersons,  in  the  course  of  movement  among 
the  states,  and  to  the  agencies  or  means  of  transporta- 
tion." (Woods,  Circuit  Judge.)  U.  S.  v.  Debs,  64  Fed. 
724,  752.    (C.  C— N.  D.  Illinois,  1895.) 

§  43.  Commercial  Intercourse. 

Interstate  and  foreign  commerce  "includes  the  purchase 
and  sale  of  articles  that  are  intended  to  be  transported 
from  one  state  to  another,  every  species  of  commercial 
intercourse  among  the  states  and  foreign  nations.  The 
term  comprehends  now  intercourse  for  the  purposes  of 
trade  in  any  and  all  of  its  forms,  including  transportation, 
purchase,  sale,  and  exchange  of  commodities  between  the 
citizens  residing  and  domiciled  in  the  different  states." 
(Sheppard,  District  Judge.)  U.  S.  v.  A77i.  Naval  Stores  Co., 
172  Fed.  455,  459.  (Charge  to  Jury.)  (C.  C— S.  D. 
Georgia,  E.  D.  1909.) 

§  44.  Navigation. 

Interstate  and  foreign  commerce  include  a  line  of  vessels 


22  Manual  of  the  Sherman  Law 

engaged  in  transporting  commodities  between  the  differ- 
ent states  of  the  union  or  between  any  of  the  states  and 
foreign  countries.  Darius  Cole  Trans.  Co.  v.  White  Star 
Line,  186  Fed.  (33,  64  et  seq.  (C.  C.  A.  Sixth  Circuit,  1911) ; 
U.  S.  V.  Pacific  &  Artie  Ry.  &  Nav.  Co.,  228  U.  S".  87 
(1913). 

§  45.  Towing  Tugs  Subject  to  Act. 

Tugs  employed  in  the  business  of  towing  vessels  engaged 
in  interstate  commerce,  and  the  lightering  and  wrecking 
of  vessels  so  engaged,  are  themselves  instrumentalities  of 
interstate  commerce.  U.  S.  v.  Great  Lakes  Toioing  Co., 
208  Fed.  733,  742.    (D.  C.  Ohio,  E.  D.  1913.) 

§  46.  Entirety  in  Two  or  More  States. 

"If  any  commercial  transaction  reaches  an  entirety  in 
two  or  more  states,  and  if  the  parties  dealing  with  reference 
to  that  transaction  deal  from  different  states,  then  the 
whole  transaction  is  a  part  of  the  interstate  commerce  of 
the  United  States."  (Speer,  District  Judge.)  In  re 
Charge  to  Grand  Jury,  151  Fed.  834,  839.  (D.  C— E.  D. 
Georgia,  1907.) 

§  47.  What  may  be  Regulated. 

"Contracts  to  buy,  sell,  or  exchange  goods  to  be  trans- 
ported among  the  several  States,  the  transixirtation  and 
its  instrumentalities,  and  articles  bought,  sold,  or  ex- 
changed for  the  purpose  of  such  transit  among  the  States, 
or  put  in  the  way  of  transit,  may  be  regulated,  but  this  is 
because  they  form  part  of  interstate  trade  or  commerce." 
{Mr.  Chief  Justice  Fuller.)  U.  S.  v.  E.  C.  Knight  Co., 
156  U.  S.  1,  13  (1895). 

§  48.  Not  a  Technical  but  a  Practical  Conception, 

Commerce  among  the  states  is  not  a  teciinical  legal 


Meaning  of  'Interstate  Commerce"  23 

conception,  but  a  practical  one  cirawn  from  the  course  of 
business.  When  certain  commodities  are  sent  for  sale 
from  one  state  to  another  where  it  is  expected  after  pur- 
chase they  will  end  their  transit,  and  when  such  expecta- 
tions are  filled,  and  this  is  a  constantly  recurring  course, 
the  current  thus  existing  is  a  current  of  commerce  among 
the  states  and  the  purchase  of  the  commodities  is  a  part 
and  incident  of  such  commerce.  Swift  &  Co.  v.  U.  S.,  196 
U.  S.  375,  398-399  (1905). 

"The  term  'restraint  of  commerce'  was  used  in  its  or- 
dinary, business  understanding  and  acceptation.  Among 
the  recognized  meanings  of  the  word  are  'prohibition  of 
action;  holding  or  pressing  back  from  action;  hindrance; 
confinement;  restriction.'  It  is  a  restriction  or  hindrance 
created  by  the  application  of  external  force.  It  is  a  vis 
major  applied  directly  and  effectually  to  carriers  of  inter- 
state commerce,  which  prevents  them  from  operation.'' 
(Phillips,  District  Judge.)  U.  S.  v.  Elliott  et  al.,  64  Fed. 
27,  30-31.    (C.  C— E.  D.  Missouri,  1894.) 

§  49.  Foreign  Commerce. 

While  the  Act  refers  in  terms  to  foreign  commerce,  it 
nevertheless  is  necessarily  confined  in  its  application  to 
the  territorial  limits  of  the  United  States,  and  does  not 
apply  to  acts  in  pursuance  of  a  monopoly  or  in  restaint 
of  trade  done  in  a  foreign  country.  "A  conspiracy  in  this 
country  to  do  acts  in  another  jurisdiction  does  not  draw  to 
itself  those  acts  and  make  them  unlawful,  if  they  are  per- 
mitted Vjy  the  local  law."  {Mr.  Justice  Holmes.)  Am. 
Banana  Co.  v.  United  Fruit  Co.,  213  U.  S.  347,  359  (1909). 

§  50.  Passengers  Between  United  States  and  Abroad. 

The  prohibitions  of  tlie  anti-trust  act  apply  broadly  to 
contracts  in  restraint  of  trade  or  commerce  with  foreign 


24  Manual  of  the  Sherman  Law 

nations  and  it  is  clear  that  transportation  of  passengers 
between  this  country  and  Europe  forms  a  part  of  the 
foreign  commerce  of  the  United  States  subject  to  the  pro- 
visions of  the  act.  U.  S.  v.  Hamhurg-Amer.,  etc.,  Ges- 
sellschaft,  200  Fed.  806,  807.  (C.  C— S.  D.  New  York, 
1911.) 

§  51.  Negotiation  and  Solicitation  of  Orders. 

"The  negotiation  of  sales  of  goods  which  are  in  another 
state,  for  the  purpose  of  introducing  them  into  the  state 
in  which  the  negotiation  is  made,  is  interstate  commerce." 
(Mr.  Justice  Bradley.)  Rohbins  v.  Taxing  Dist.,  120 
U.  S.  489,  497  (1887);  U.  S.  v.  Addyston  Pipe  &  Steel  Co., 
85  Fed.  271,  295.    (C.  C.  A.  Sixth  Circuit,  1898). 

"Transactions  between  manufacturing  companies  in 
one  state,  through  agents,  with  citizens  of  another,  con- 
stitute a  large  part  of  interstate  commerce."  {Mr.  Jus- 
tice Shiras.)  Caldwell  v.  North  Carolina,  187  U.  S.  622, 
632  (1903). 

"  The  power  of  congress  to  regulate  commerce  is  not  con- 
fined to  goods  which  have  begun  their  movement  out  of 
the  state  in  which  they  are  manufactured,"  but  "  it  ex- 
tends to  negotiations  and  contracts  made  preliminar^'^  to 
the  manufacture,  sale,  and  shipment  of  goods  in  interstate 
commerce."  (Gilbert,  Circuit  Jiidge.)  Gibbs  v.  M'Neehj, 
118  Fed.  120,  123.    (C.  C.  A.  Ninth  Circuit,  1902.) 

"  It  is  settled  by  the  decisions  of  the  supreme  court  that 
such  commerce  includes,  not  only  the  actual  transportation 
of  commodities  and  persons  between  the  states,  but  also  the 
instrumentalities  and  processes  of  such  transportation.  That 
it  includes  all  the  negotiations  and  contracts  which  have 
for  their  object,  or  involve  as  an  element  thereof,  such 
transmission  or  passage  from  one  state  to  another.  That 
such  commerce  begins,  and  the  regulating  power  of  con- 


Meaning  of  "Interstate  Commerce"  25 

gress  attaches,  when  the  commodity  or  thing  traded  in 
commences  its  transportation  from  the  state  of  its  produc- 
tion or  situs  to  some  other  state  or  foreign  country,  and 
terminates  when  the  transportation  is  completed,  and  the 
property  has  become  a  part  of  the  general  mass  of  the 
property  in  the  state  of  its  destination."  (Italics  mine.) 
(Jackson,  Circuit  Judge.)  In  re  Greene,  52  Fed.  104,  113. 
(C.  C— S.  D.  Ohio,  W.  D.  1892.) 

"The  goods  are  not  within  the  control  of  congress  until 
they  are  in  actual  transit  from  one  state  to  another.  But 
the  negotiations  and  making  of  sales  which  necessarily 
involve  in  their  execution  the  delivery  of  merchandise 
across  state  lines  are  interstate  commerce,  and  so  within 
the  regulating  power  of  congress  even  before  the  transit  of 
the  goods  in  performance  of  the  contract  has  begun." 
(Taft,  Circuit  Judge.)  U.  S.  v.  Addyston  Pipe  &  Steel 
Co.,  85  Fed.  271,  298.    (C.  C.  A.  Sixth  Circuit,  1898.) 

"If,  then,  the  soliciting  of  orders  for,  and  the  sale  of, 
goods  in  one  state,  to  be  delivered  from  another  state,  is 
interstate  commerce  in  its  strictest  and  highest  sense, — 
such  that  the  states  are  excluded  by  the  federal  constitu- 
tion from  a  right  to  regulate  or  tax  the  same, — it  seems 
clear  that  contracts  in  restraint  of  such  solicitations,  nego- 
tiations, and  sales  are  contracts  in  restraint  of  interstate 
commerce."  (Taft,  Circuit  Judge.)  U.  S.  v.  Addyston 
Pipe  &  Steel  Co.,  85  Fed.  271,  295,  296  (C.  C.  A.  Sixth 
Circuit,  1898);  Lowry  v.  Tile,  Mantel  &  Grate  Assn.,  106 
Fed.  38,  45.    (C.  C— N.  D.  California,  1900.) 

§  52.  Solicitors  of  Commission  Merchants. 

"The  position  of  the  solicitors  (of  commission  mer- 
chants) is  entirely  different  from  that  of  drummers  who 
are  traveling  through  the  several  States  for  the  purpose 
of  getting  orders  for  the  purchase  of  property.    It  was  said 


26  Manual  of  the  Sherman  Law 

in  Robbins  v.  Shelby  County  Taxing  District,  120  U.  S.  489, 
that  the  negotiation  of  sales  of  goods  which  are  in  another 
State  for  the  purpose  of  introducing  them  into  the  State  in 
which  the  negotiation  is  made  is  interstate  commerce." 
(Mr.  Justice  Peckham.)  Hopkins  v.  [/.  *S\,  171  U.  S.  578, 
GOl  (1898). 

There  is  no  interstate  commerce  where  soUcitors  "  have 
no  property  or  goods  for  sale,  and  their  only  duty  is  to  ask 
or  induce  those  who  own  the  propiu-ty  to  agree  that  when 
they  send  it  to  market  for  sale  they  will  consign  it  to  the 
solicitor's  principal,  so  that  he  may  perform  such  services 
as  may  be  necessary  to  sell  the  stock  for  them  and  account 
to  them  for  the  proceeds  thereof.  Unlike  the  drummer  who 
contracts  in  one  State  for  the  sale  of  goods  which  are  in 
another,  and  which  are  to  be  thereafter  delivered  in  the 
State  in  which  the  contract  is  made,  the  solicitor  in  this 
case  has  no  gootls  or  samples  of  goods  and  negotiates  no 
sales,  and  merely  seeks  to  exact  a  promise  from  the  ownei- 
of  property  that  when  he  does  wish  to  sell  he  will  consign 
to  and  sell  the  property  through  the  solicitor's  principal," 
(Mr.  Justice  Peckham!)  Hopkins  v.  U.  S.,  171  U.  S.  587, 
002-603  (1898). 

§  53.  Manufacturing  is  not  Commerce. 

''('onnncrce  succeeds  to  niamifacture,  and  is  not  a  part 
of  it.  Tlu^  power  to  regulate  commerce  is  the  power  to 
prescribe  the  rule  l)y  which  commerce  shall  be  governed, 
and  is  a  power  independent  of  the  ])ower  to  sui)press 
monopoly.  But  it  may  operate  in  n>pression  of  monopoly 
whenev<>r  that  comes  within  the  rules  by  which  commerce 
is  governed  or  wherever  the  transaction  is  itself  a  monopoly 
of  commerce."  (Mr.  Chief  Justice  Fuller.)  U.  S.  v. 
E.  C.  Kmght  Co.,  156  IT.  S.  1,  12  (1895). 

"Manufacture  and  commerce  are  two  distinct  and  very 


Meaning  of  "Interstate  Commerce"  27 

different  things.  The  latter  does  not  include  the  former. 
Buying  and  selling  are  elements  of  commerce,"  but  some- 
thing more  than  manufacturing  is  required  to  constitute 
commerce.  (Dallas,  Circuit  Judge.)  U.  S.  v.  E.  C. 
Knight  Co.,  60  Fed.  934,  936.  (C.  C.  A.  Third  Circuit, 
1894.) 

"Manufacture  is  transformation — the  fashioning  of  raw 
materials  into  a  change  of  form  for  use.  The  functions  of 
commerce  are  different.  The  buying  and  selling  and  the 
transportation  incidental  thereto  constitute  commerce ;  and 
the  regulation  of  commerce  in  the  constitutional  sense  em- 
braces the  regulation  at  least  of  such  transportation." 
(Mr.  Chief  Justice  Fuller.)  U.  S.  v.  E.  C.  Knight  Co.,  156 
U.  S.  1,  14  (1895.) 

§  54.  Production  of  Manufactured  Articles  and  Preparation 
for  Transportation. 

"Neither  the  production  or  manufacture  of  articles  or 
commodities  which  constitute  subjects  of  commerce,  and 
which  are  intended  for  trade  and  traffic  with  citizens  of 
other  states,  nor  the  preparation  for  their  transportation 
from  the  state  where  produced  or  manufactured,  prior  to 
the  commencement  of  the  actual  transfer,  or  transmission 
thereof  to  another  state,  constitutes  that  interstate  com- 
merce which  comes  within  the  regulating  power  of  con- 
gress." (Jackson,  Circuit  Judge.)  hi  re  Greene,  52  Fed. 
104,  113.    (C.  C— S.  D.  Ohio,  W.  D.  1892.) 

§  55.  Mere  Intent  of  Manufacturer. 

"The  fact  that  an  article  is  manufactured  for  export  to 
another  State,  does  not  of  itself  make  it  an  article  of  inter- 
state commerce,  and  the  intent  of  the  manufacturer  does 
not  determine  the  time  when  the  article  or  product  passes 
from  the  control  of  the  States  and  belongs  to  commerce." 


28  Manual  of  the  Sherman  Law 

{Mr.  Chief  Justice  Fuller.)     U.  S.  v.  E.  C.  Knight  Co., 
156  U.  S.  1,  13  (1895). 

§  56.  Delivery  within  for  Transportation  without  a  Single 
State. 

The  mere  fact  that  the  sales  and  dehveries  of  a  certain 
commodity  took  place  within  a  single  state  is  not  con- 
trolling, where  the  purpose  was  in  conformance  with  the 
usual  course  of  business  that  the  commodity  would  become 
a  part  of  an  existing  current  of  interstate  trade.  U.  S.  v. 
Reading  Co.,  226  U.  S.  324,  367-368  (1912);  U.  S.  v. 
Whiting,  212  Fed.  466,  471-472.    (D.  C.  Mass.  1914.) 

§  57.  Combination  Restraining  both  Manufacture  and  Sale. 

"  Interstate  commerce  consists  of  intercourse  and  traffic 
between  the  citizens  or  inhabitants  of  different  States,  and 
includes  not  only  the  transportation  of  persons  and  prop- 
erty and  the  navigation  of  public  waters  for  that  purpose, 
but  also  the  purchase,  sale  and  exchange  of  commodities. 
Gloucester  Fenij  Co.  v.  Pennsylvania,  114  U.  S.  196,  203; 
Kidd  V.  Pearson,  128  U.  S.  1,  20.  If,  therefore,  an  agree- 
ment or  combination  directly  restrains  not  alone  the  man- 
ufacture, but  the  purchase,  sale  or  exchange  of  the  manu- 
factured commodity  among  the  several  States,  it  is  brought 
within  the  ])ro visions  of  the  statute."  (Mr.  Justice  Peck- 
ham.)  Addyston  Pipe  &  Steel  Co.  v.  U.  S.,  175  U.  S.  211, 
241  (1899). 

"Where  the  contract  is  for  the  sale  of  the  article  and 
for  its  delivery  in  another  State,  the  transaction  is  one  of 
interstate  commerce,  although  the  vc^ndor  may  have  also 
agreed  to  manufacture  it  in  order  to  fulfil  liis  contract  of 
sale.  In  such  case  a  combination  of  this  character  would 
be  properly  called  a  combination  in  restraint  of  interstate 
commerce,  and  not  one  relating  only  to  manufacture." 


Meaning  of  "Interstate  Commerce"  29 

(Mr.  Judice  Peckham.)     Addyston  Pipe  &  Steel  Co.  v. 
U.  S.,  175  U.  S.  211,  246  (1899). 

A  corporation  manufacturing  goods  in  one  state,  and 
thence  shipping  to  warehouses  located  in  other  states 
from  which  said  goods  are  sold  partly  within  said  states 
and  partly  beyond  their  borders  is  engaged  in  interstate 
commerce.  Standard  Sanitary  Mfg.  Co.  v.  U.  S.,  226  U.  S. 
20,  51  (1912). 

§  58.  Commerce  Partly  Intrastate  and  Partly  Interstate. 

Although  some  of  the  means  whereby  the  interstate 
traffic  was  to  be  destroyed  were  acts  within  a  state  and 
some  of  them  were  as  a  part  of  their  obvious  purpose  and 
effect  beyond  the  scope  of  federal  authority,  yet  the  acts 
must  be  considered  as  a  whole,  and  the  plan  is  open  to 
condemnation,  notwithstanding  a  certain  amount  of  in- 
trastate business  might  be  effected  in  carrying  it  out. 
Loewe  v.  Lawlor,  208  U.  S.  274,  301  (1908). 

§  59.  Act  does  not  Apply  to  Intrastate  Commerce. 

"Of  course,  the  statute  does  not  apply  where  the  trade 
or  commerce  affected  is  purely  intrastate.  Neither  does  it 
apply,  as  this  court  often  has  held,  where  the  trade  or 
commerce  affected  is  interstate,  unless  the  effect  thereon 
is  direct,  not  merely  indirect."  (Mr.  Justice  Van  De- 
vanter.)     U.  S.  v.  Patten,  226  U.  S.  525,  542  (1913). 

§  60.  Congress  has  no  Authority  over  Articles  outside  of 
Stream  of  Interstate  Commerce. 
"It  is  the  stream  of  commerce  flowing  across  the  states, 
and  between  them  and  foreign  nations  that  congress  is 
authorized  to  regulate.  To  prevent  direct  interference 
with  or  disturbance  of  this  flow  alone,  was  the  power 
granted  to  the  federal  government.    Congress  has  there- 


'30  Manual  of  the  Sherman  Law 

fore  no  authority  over  articles  of  merchandise  or  their 
owners,  or  contracts  or  combinations  respecting  them, 
which  have  not  entered  into  this  stream,  or  having  en- 
tered, have  passed  out."  (Butler,  District  Judge.)  U.  S. 
V.  E.  C.  Knight  Co.,  60  Fed.  306,  309-310.  (C.  C— E.  D. 
Pennsylvania,  1894.) 

"It  was  in  the  Hght  of  well-settled  principles  that  the 
act  of  July  2,  1890,  was  framed.  Congress  did  not  attempt 
thereby  to  assert  the  power  to  deal  with  monopoly  di- 
rectly as  such;  or  to  limit  and  restrict  the  rights  of  cor- 
jiorations  created  by  the  States  or  the  citizens  of  the  States 
in  the  acquisition,  control,  or  disposition  of  property;  or 
to  regulate  or  prescribe  the  price  or  prices  at  which  such 
property  or  the  products  thereof  should  be  sold;  or  to 
make  criminal  the  acts  of  persons  in  the  acquisition  and 
control  of  property  which  the  States  of  their  residence  or 
creation  sanctioned  or  permitted."  {Mr.  Chief  Justice 
Fuller.)  U.  S.  v.  E.  C.  Knight  Co.,  156  U.  S.  1,  16 
(1895). 

§  61.  Indirect  External  Effect  of  Enterprises  wholly  within 
State. 
"Contracts,  combinations,  or  conspiracies  to  control 
domestic  enterprise  in  manufacture,  agriculture,  mining, 
production  in  all  its  forms,  or  to  raise  or  lower  prices  or 
wages,  might  unquestionably  tend  to  restrain  external  as 
well  as  domestic  trade,  but  the  restraint  would  be  an  in- 
direct result,  however  inevitable  and  whatever  its  extent, 
and  such  result  would  not  necessarily  determine  the  ob- 
ject of  the  contract,  combination  or  conspiracy."  {Mr. 
Chief  Justice  Fuller.)  U.  S.  v.  E.  C.  Knight  Co.,  156 
U.  S.  1,  16  (1895).  Sec  also  Hopkitis  v.  U.  S.,  171  U.  S. 
578,  587  et  seq.  {1898) ;  Anderson  v.  U.  S.,  171  U.  S.  604, 
612etseq.  (1898). 


Meaning  of  "Interstate  Commerce"  31 

§  62.  Stock  Exchanges. 

"It  would  be  an  entirely  novel  view  of  the  situation  if 
all  the  members  of  these  different  exchanges  throughout 
the  country  were  to  be  regarded  as  engaged  in  interstate 
commerce,  because  they  sell  things  for  their  principals 
which  come  from  States  different  from  the  one  in  which 
the  exchange  is  situated  and  the  sale  made."  {Mr.  Jus- 
tice Peckham.)  Hopkins  v.  U.  S.,  171  U.  S.  578,  597 
(1898). 

"The  selling  of  an  article  at  its  destination,  which  has 
been  sent  from  another  State,  while  it  may  be  regarded 
as  an  interstate  sale  and  one  which  the  importer  was  en- 
titled to  make,  yet  the  services  of  the  individual  employed 
at  the  place  where  the  article  is  sold  are  not  so  connected 
with  the  subject  sold  as  to  make  them  a  portion  of  inter- 
state commerce,  and  a  combination  in  regard  to  the 
amount  to  be  charged  for  such  service  is  not,  therefore,  a 
combination  in  restraint  of  that  trade  or  commerce." 
(Mr.  Justice  Peckham.)  Hopkins  v.  U.  S.,  171  U.  S.  578, 
590-591  (1898). 

§  63.  Charges  for  Facilities  Furnished. 

"Charges  for  facilities  furnished  have  been  held  not  a 
regulation  of  commerce,  even  when  made  for  services  ren- 
dered or  as  compensation  for  benefits  conferred.  Sands 
v.  Manistee  River  Improvement  Co.,  123  U.  S.  288;  Monon- 
gahela  Navigation  Co.  v.  U.  S.,  148  U.  S.  312,  329,  330; 
Kentucky  &  Indiana  Bridge  Company  v.  Louisville  &c. 
Railroad,  37  Fed.  Rep.  567."  {Mr.  Justice  Peckham.) 
Hopkins  v.  U.  S.,  171  U.  S.  578,  592  (1898). 

"In  all  the  cases  which  have  come  to  this  court  there  is 
not  one  which  has  denied  the  distinction  between  a  regu- 
lation which  directly  affects  and  embarrasses  interstate 
trade  or  commerce,  and  one  which  is  nothing  more  than  a 


32  Manual  of  the  Sherman  Law 

charge  for  a  local  facility  provided  for  the  transaction  of 
such  commerce."  {Mr.  Justice  Peckham.)  Hopkins  v. 
U.  S.,  171  U.  S.  578,  597  (1898). 

§  64.  Commission  Merchants  or  Agents. 

The  charges  of  a  commission  agent  on  account  of  his 
services  "are  nothing  more  than  charges  for  aids  or  facil- 
ities furnished  the  owner  whereby  his  object  may  be  the 
more  easily  and  readily  accomplished.  Charges  for  the 
transportation  of  cattle  between  different  States  are 
charges  for  doing  something  which  is  one  of  the  forms  of 
and  which  itself  constitutes  interstate  trade  or  commerce, 
while  charges  or  commissions  based  upon  services  per- 
formed for  the  owner  in  effecting  the  sale  of  the  cattle  are 
not  directly  connected  with,  as  forming  part  of,  interstate 
commerce,  although  the  cattle  may  have  come  from  an- 
other State.  Charges  for  services  of  this  nature  do  not 
immediately  touch  or  act  upon  nor  do  they  directly  affect 
the  subject  of  the  transportation."  (Mr.  Justice  Peck- 
ham.)    Hopkins  V.  U.  S.,  171  U.  S.  578,  591  (1898). 

§  65.  State  Line  Through  Stock  yards. 

There  is  no  materiality  in  the  fact  that  a  state  line  runs 
through  stockyards  "resulting  in  some  of  the  pens  in  which 
the  stock  may  be  confined  l)eing  partly  in  the  State  of 
Kansas  and  partly  in  the  State  of  Missouri,  and  that  sales 
may  be  made  at  the  time  partly  in  one  state  and  partly 
in  the  other.  The  erection  of  the  building  and  the  putting 
up  of  the  stock  pens  upon  the  ground  were  matters  of  no 
moment  so  far  as  any  question  of  interstate  commerce  is 
concerned."  {Mr.  Justice  Peckham.)  Hopkins  v.  United 
States,  171  U.  S.  578,  603  (1898). 

§  66.  Indirect  State  Legislation. 

"The  refusal  of  a  State  to  allow  articles  to  be  manu- 


Meaning  of  "Interstate  Commerce"  33 

factured  within  her  borders  even  for  export  was  held  not 
to  directly  affect  external  commerce,  and  state  legislation 
which,  in  a  great  variety  of  ways,  affected  interstate  com- 
merce and  persons  engaged  in  it,  has  been  frequently  sus- 
tained because  the  interference  Avas  not  direct."  (Mr. 
Chief  Justice  Fuller.)  U.  S.  v.  E.  C.  Knight  Co.,  156 
U.  S.  1,  16  (1895). 

§  67.  Not  Necessary  for  Title  to  Pass. 

It  is  not  important  where  title  to  the  goods  sold  by  a 
salesman  technically  passes.  "Commerce  among  the 
states  is  a  practical  conception,  not  drawn  from  the  '  witty 
diversities'  of  the  law  of  sales."  (Concurring  opinion  of 
Noyes,  Circuit  Judge.)  U.  S.  v.  A7n.  Tobacco  Co.,  164  Fed. 
700,  714.  (C.  C— S.  D.  New  York,  1908).  Quoting  from 
Rearick  v.  Pennsylvania,  203  U.  S.  507. 

§  68.  Leased  Machinery. 

Machinery  under  lease  which  is  shipped  to  lessees  in 
various  states  is  subject  to  the  federal  regulation  of  inter- 
state commerce,  notwithstanding  the  fact  that  such  ma- 
chinery is  never  sold.  U.  S.  v.  Winslow,  195  Fed.  578, 
584.  (D.  C.  Mass.  1912) ;  Cole  Transp.  Co.  v.  White  Star 
Line,  186  Fed.  63,  67.    (C.  C.  A.  Sixth  Circuit,  1911). 

§  69.  After  Termination  of  Transportation. 

"After  the  termination  of  the  transportation  of  com- 
modities or  articles  of  traffic  from  one  state  to  another,  and 
the  mingling  or  merging  thereof  in  the  general  mass  of 
property  in  the  state  of  destination,  the  sale,  distribution, 
and  consumption  thereof  in  the  latter  state  forms  no  part 
of  interstate  commerce.  Pensacola  Tel.  Co.  v.  Western 
Union  Tel.  Co.^  99  U.  8.  1;  Brown  v.  Houston,  114  U.  S. 
622,  5  Sup.  Ct.  Rep.  1091;  Coe  v.  Errol,  116  U.  S.  517, 


34  Manual  of  the  Sherman  Law 

520,  6  Sup.  Ct.  Rep.  475;  Robhins  v.  Taxing  DisL,  120 
U.  S.  497,  7  Sup.  Ct.  Rep.  592,  and  Kidd  v.  Pearson,  128 
U.  S.  1,  9  Sup.  Ct.  Rep.  6."  (Jackson,  Circuit  Judge.) 
In  re  Greene,  52  Fed.  104,  114.  (C.  C— S.  D.  Ohio,  W.  D. 
1892). 

§  70.  Immaterial  that  Transported  Article  is  Taxed  in  Place 
of  Manufacture. 
"An}'  combination  among  dealers  in  that  kind  of  com- 
modity, Avhich  in  its  direct  and  immediate  effect,  forecloses 
all  competition  and  enhances  the  purchase  price  for  which 
such  commodity  would  otherwise  be  delivered  at  its 
destination  in  another  State,  would  in  our  opinion  be  one 
in  restraint  of  trade  or  commerce  among  the  States,  even 
though  the  article  to  be  transported  and  delivered  in  an- 
other state  were  still  taxable  at  its  place  of  manufacture." 
{Mr.  Justice  Peckham.)  Addyston  Pipe  &  Steel  Co.  v. 
U.S.,  175  U.  S.  211,  246  (1899). 

§  71.  Single  Shipment. 

"We  cannot  doubt  that  there  may  be  a  conspiracy  un- 
der the  act  with  reference  to  a  single  shipment  only." 
(Dennison,  Circuit  Judge.)  Steers  v.  U.  S.,  192  U.  S.  1,5. 
(C.  C.  A.  Sixth  Circuit,  1911.) 


CHAPTER  IV 

RAILROAD   TRANSPORTATION 

§  72.  Act  Applies  to  Interstate  Railroads. 

"The  act  applies  to  interstate  railroads  as  carriers  con- 
ducting interstate  commerce,  and  one  of  the  principal 
instrumentalities  thereof."  {Mr.  Justice  Day.)  U.  S.  v. 
Union  Pacific  R.  R.  Co.,  226  U.  S.  61,  82  (1912);  No. 
Securities  Co.  v.  U.  S.,  193  U.  S.  197,  331  (1904);  U.  S.  v. 
Freight  Assn.,  166  U.  S.  290,  312  (1897). 

"Nor  do  we  think  that  because  the  sixth  section  does 
not  forfeit  the  property  of  the  railroad  company  when 
merely  engaged  in  the  transportation  of  property  owned 
under  and  which  was  the  subject  of  a  contract  or  combina- 
tion mentioned  in  the  first  section,  any  ground  is  shown  for 
holding  the  rest  of  the  act  inapplicable  to  carriers  by  rail- 
road." {Mr.  Justice  Peckham.)  U.  S.  v.  Freight  Assn., 
166  U.  S.  290,  313  (1897). 

The  statute  is  not  "so  uncertain  in  its  meaning,  or  its 
language  so  vague,  that  it  ought  not  to  be  held  applicable 
to  railroads.  It  prohibits  contracts,  combinations,  etc.,  in 
restraint  of  trade  or  commerce.  Transporting  commod- 
ities is  commerce,  and  if  from  one  State  to  or  through  an- 
other it  is  interstate  commerce."  {Mr.  Justice  Peckham.) 
U.  S.  V.  Freight  Assn.,  166  U.  S.  290,  325  (1897). 

"Pullman  cars  in  use  upon  the  roads  are  instrumental- 
ities of  commerce.  U.  S.  v.  Debs,  64  Fed.  763."  (Mor- 
row, District  Judge.)  U.  S.  v.  Cassidy,  67  Fed.  689,  705. 
(D.  C— N.  D.  California,  1895.) 

35 


36  Manual  of  the  Sherman  Law 

§  73.  Contracts  in  Restraint  Between  Competing  Railroads. 

"An  act  which  prohibits  the  making  of  every  contract, 
etc.,  in  restraint  of  trade  or  commerce  among  the  several 
States,  would  seem  to  cover  by  such  language  a  contract 
between  competing  railroads,  and  relating  to  traffic  rates 
for  the  transportation  of  articles  of  commerce  lietween  the 
States,  provided  such  contract  by  its  direct  effect  produces 
a  restraint  of  trade  or  commerce."  (Mr.  JuMice  Peck- 
ham.)     U.  S.  V.  Freight  Assn.,  166  U.  S.  290,  313  (1897). 

"It  cannot  be  denied  that  those  who  are  engaged  in  the 
transportation  of  persons  or  property  from  one  State  to 
another  are  engaged  in  interstate  commerce,  and  it  would 
seem  to  follow  that  if  such  persons  enter  into  agreements 
between  themselves  in  regard  to  the  compensation  to  be 
secured  from  the  owners  of  the  articles  transported,  such 
agreement  would  at  least  relate  to  the  business  of  com- 
merce, and  might  more  or  less  restrain  it."  (Mr.  Justice 
Peckham.)  U.  S.  v.  Freight  Assn.,  166  U.  S.  290,  312 
(1897). 

§  74.  Distinction  Between  Railroad  and  Other  Corporations. 
"The  points  of  difference  between  the  railroad  and  other 
corporations  are  many  and  great.  It  cannot  be  disputed 
that  a  railroad  is  a  public  corporation,  and  its  business  per- 
tains to  and  greatly  affects  the  public,  and  that  it  is  of  a 
public  nature.  The  company  may  not  charge  unreasonable 
prices  for  transportation,  nor  can  it  make  unjust  discrim- 
inations nor  select  its  patrons,  nor  go  out  of  business  when 
it  chooses,  while  a  mere  trading  or  manufacturing  com- 
pany may  do  all  these  things."  (Mr.  Justice  Peckham.) 
U.  S.  V.  Freight  Assn.,  166  U.  S.  290,  321-322  (1897). 

§  75.  Distinction  Between  Private  Individuals  and  Railroads. 

"The  trader  or  manufacturer,  on  the  other  hand,  car- 


Railroad  Transportation  37 

ries  on  an  entirely  private  business,  and  can  sell  to  whom  he 
pleases;  he  may  charge  different  prices  for  the  same  article 
to  different  individuals;  he  may  charge  as  much  as  he  can 
get  for  the  article  in  which  he  deals,  whether  the  price  be 
reasonable  or  unreasonable ;  he  may  make  such  discrimina- 
tion  in  his  business  as  he  chooses,  and  he  may  cease  to  do 
any  business  whenever  his  choice  lies  in  that  direction; 
while,  on  the  contrary,  a  railroad  company  must  transport 
all  persons  and  property  that  comes  to  it,  and  it  must  do 
so  at  the  same  price  for  the  same  service,  and  the  price 
must  be  reasonable,  and  it  cannot  at  its  will  discontinue 
its  business."  (Mr.  Justice  Peckham.)  U.  S.  v.  Freight 
Ass7i.,  166  U.  S.  290,  320-321  (1897).  See,  however, 
section  2  of  the  Clayton  Act,  now  making  it  unlawful  even 
for  private  persons  to  discriminate,  with  certain  exceptions. 

§  76.  Correction  of  Evils  Common  to  both  Railroads  and 
Individuals. 
"It  is  entirely  appropriate  generally  to  subject  corpora- 
tions or  persons  engaged  in  trading  or  manufacturing  to 
different  rules  from  those  applicable  to  railroads  in  their 
transportation  business;  but  when  the  evil  to  be  remedied 
is  similar  in  both  kinds  of  corporations,  such  as  contracts 
which  are  unquestionably  in  restraint  of  trade,  we  see  no 
reason  why  similar  rules  should  not  be  promulgated  in 
regard  to  both,  and  both  be  covered  in  the  same  statute 
by  general  language  sufficiently  broad  to  include  them 
both."  (Mr.  Justice  Peckham.)  U.  S.  v.  Freight  Assn., 
166  U.  S.  290,  324-325  (1897). 

§  77.  Public  Entitled  to  Free  Competition  Between  Railroads. 
"In  my  judgment,  the  right  to  insist  upon  free  competi- 
tion between  railway  companies  engaged  in  carrying  on 
interstate  commerce  is  a  right  which  belongs  to  the  public, 


38  Manual  of  the  Sherman  Law 

of  which  it  cannot  be  deprived  except  by  its  own  consent, 
and  every  contract  or  combination  between  these  public 
corporations  which  tends  to  remove  the  business  carried 
on  by  them  from  the  influence  of  free  competition  tends  to 
deprive  the  pubUc  of  this  right,  of  necessity  tends  to  sub- 
ject interstate  commerce  to  burdens  which  are  a  restraint 
thereon,  is  inimical  to  the  public  welfare,  is  contrary  to 
public  policy,  and  in  contravention  of  both  the  language 
and  spirit  of  the  anti-trust  act  of  July  2,  1890."  (Shiras, 
District  Judge.)  U.  S.  v.  Trans-Missouri  Freight  Assn.,  58 
Fed.  58,  100.    (C.  C.  A.  Eighth  Circuit,  1893.) 

§  78.  Prevention  of  Transportation. 

If  the  purposes  of  the  combination  were  "to  prevent 
any  interstate  transportation  at  all,  the  fact  that  the 
means  operated  at  one  end  before  physical  transportation 
commenced,  and  at  the  other  end  after  physical  trans- 
portation ended  is  immaterial."  (Mr.  Chief  Justice  Ful- 
ler.)   Loewe  v.  Lawlor,  208  U.  S.  274,  301  (1908). 

The  provisions  of  the  Sherman  Law  are  broad  enough 
to  reach  a  combination  or  conspiracy  that  would  interrupt 
the  transportation  of  commodities  from  one  state  to  an- 
other, and  "any  combination  or  conspiracy  on  the  part 
of  any  class  of  men  who  by  violence  and  intimidation 
prevent  the  passage  of  railroad  trains  engaged  in  transj^ort- 
ing  the  interstate  commerce  of  the  country  is  a  violation 
of  the  Act  of  July  2,  1890."  (Morrow,  District  Judge.) 
In  re  Grand  Jury,  62  Fed.  840,  842.  (D.  C— N.  D.  Cali- 
fornia, 1894.) 

"A  combination  whose  professed  object  is  to  resist  the 
operation  of  railroads  whose  lines  extend  from  a  great  city 
into  adjoining  states,  until  such  roads  accede  to  certain 
demands  made  upon  them,  whether  such  demands  are  in 
themselves  reasonable  or  unreasonable,  just  or  unjust,  is 


Railroad  Transportation  39 

certainly  an  unlawful  conspiracy  in  restraint  of  commerce 
among  the  states.  Under  the  laws  of  the  United  States, 
as  well  as  at  common  law,  men  may  not  conspire  to  accom- 
plish a  lawful  purpose  by  unlawful  means."  (Thayer, 
District  Judge.)  U.  S.  v.  Elliott,  62  Fed.  801, 803.  (C.  C— 
E.  D.  Missouri,  E.  D.  1894) ;  U.  S.  v.  Elliott,  64  Fed.  27, 
33.    (C.  C— E.  D.  Missouri,  1894.) 

"The  primary  object  of  the  statute  was,  undoubtedly, 
to  prevent  the  destruction  of  legitimate  and  healthy  com- 
petition in  interstate  commerce  by  individuals,  corpora- 
tions, and  trusts,  grasping,  engrossing,  and  monopolizing 
the  markets  for  commodities.  U.  S.  v.  Patterson,  55  Fed. 
605.  But  its  provisions  are  broad  enough  to  reach  a  com- 
bination or  conspiracy  that  would  interrupt  the  trans- 
portation of  such  commodities  and  persons  from  one  state 
to  another."  (Morrow,  District  Judge.)  U.  S.  v.  Cas- 
sidy,  67  Fed.  698,  705.    (D.  C— N.  D.  California,  1895.) 

§  79.  Consolidation  by  Transfer  of  Dominating  Stock  In- 
terest. 

"The  consolidation  of  two  great  competing  systems  of 
railroad  engaged  in  interstate  commerce  by  a  transfer  to 
one  of  a  dominating  stock  interest  in  the  other  creates  a 
combination  which  restrains  interstate  commerce  within 
the  meaning  of  the  statute,  because,  in  destroying  or 
greatly  abridging  the  free  operation  of  competition  there- 
tofore existing,  it  tends  to  higher  rates."  (Mr.  Justice 
Day.)    U.  S.  v.  Union Pac.  Ry.  Co.,  226  U.  S.  61, 88  (1912). 

A  more  effectual  form  of  combination  to  secure  the  con- 
trol of  a  competing  railroad  than  for  one  road  to  acquire  a 
dominating  stock  interest  in  the  other  could  hardly  be 
conceived.  If  it  be  true  that  such  a  stock  interest  was 
obtained  with  a  view  of  destroying  or  restricting  in- 
terstate trade,  the  transaction  is  within  the  terms  of  the 


40  Manual  of  the  Sherman  Law 

statute.     U.  S.  v.  U7iion  Pacific  R.  R.  Co.,  226  U.  S.  61, 
86  (1912). 

It  is  provided  by  the  Clayton  Act  that  no  corporation 
engaged  in  interstate  commerce  shall  acquire  directly  or 
indirectly  the  stock  in  whole  or  in  part  of  another  corpora- 
tion engaged  in  such  commerce  Avhere  the  effect  is  to  sub- 
stantially lessen  competition,  restrain  commerce  or  to 
create  a  monopoly,  excepting,  however,  where  the  ac- 
quisition of  stock  was  solely  for  investment  purposes,  or 
where  the  stock  acquired  was  of  subsidiaries  or  branches 
which  were  formed  for  carrying  on  the  l)usiness,  or  where 
in  the  case  of  common  carriers  there  was  a  holding  of  the 
stock  of  branches  or  short  lines  which  were  built  as  feeders 
to  the  main  line  or  which  do  not  compete  therewith.  Clay- 
ton Act  {Act  of  Oct.  15,  1914),  Sect.  7. 

§  80.  Single  Dominating  Control  in  One  Corporation. 

It  is  settled  that  "a  combination  which  jilaces  railroads 
engaged  in  interstate  commerce  in  such  relation  as  to  create 
a  single  dominating  control  in  one  corporation,  whereby 
natural  and  existing  competition  in  interstate  commerce  is 
unduly  restricted  or  suppressed,  is  within  the  condemna- 
tion of  the  act.  While  the  law  may  not  be  able  to  enforce 
competition,  it  can  reach  combinations  which  render  com- 
petition impracticable."  (Mr.  Justice  Day.)  U.  S.  v. 
Union  Pac.  R.  R.  Co.,  220  U.  S.  01,  85  (1912). 

§  81.  Acquisition  of  Entire  System  of  Competitor. 

"Because  it  would  have  been  lawful  to  gain,  by  purchase 
or  otherwise,  an  entrance  into  California  over  the  old 
Central  Pacific,  does  not  render  it  legal  to  acquire  the  en- 
tire system,  largely  engaged  in  interstate  (!ommerce  incom- 
l)etition  uith  the  j)urchasing  road."  (Mr.  JuMice  Day.) 
U.  S.  v.  Union  Pac.  R.  R.  Co.,  226  U.  S.  61,  93  (1912). 


Railroad  Transportation  41 

§  82.  Use  of  Auxiliary  Lines. 

"I  know  ot"  no  principle  of  common  law  which  forbids 
an  individual  railroad  corporation,  or  two  or  three  or  more 
corporations,  from  selecting  as  to  which  one  or  two  or  more 
corporations  they  will  employ,  as  auxiliary  to  their  own 
lines,  as  the  agency  by  which  they  will  send  freight  beyond 
their  own  lines,  or  as  their  agent  to  receive  freight  on  the 
auxiliary  line  to  be  transmitted  to  their  owti  line  upon 
through  bills,  and  without  breaking  bulk."  (Lacombe, 
Circuit  Judge.)  Prescott  &  A.  C.  R.  Co.  v.  Atchison,  T.  & 
S.  F.  R.  Co.,  73  Fed.  438,  439.  (C.  C— S.  D.  New  York, 
1896.) 

§  83.  Combination  Compelling  Use  of  Single  Terminal. 

Where  the  combination  of  terminal  companies  into  a 
single  system  is  under  such  inherent  conditions  that  any 
other  reasonable  means  of  entering  the  terminal  is  pre- 
vented, and  independent  companies  are  under  compulsion 
to  use  such  single  system,  such  combination  violated  both 
the  first  and  second  sections  of  the  act.  U.  S.  v.  St.  Louis 
Terminal,  224  U.  S.  383,  409  (1911). 

§  84.  Competition  may  be  by  Character  of  Service  Rendered. 

Competition  consists  not  only  in  making  rates  but  in- 
cludes the  character  of  services  rendered.  Advantages  in 
such  respects  may  be  the  subject  of  representation  and 
the  basis  of  solicitation  by  many  active  opposing  agencies 
of  their  respective  competitors.  U.  S.  v.  Union  Pac.  R.  R. 
Co.,  226  U.  S.  61,  87  (1912). 

§  86.  Comparative  Insignificance  of  Competition  Substantial 
in  Amount. 

That  the  amount  of  competitive  business  was  a  com- 
paratively small  part  of  the  sum  total  of  the  interstate 


42  Manual  of  the  Sherman  Law 

commerce  carried  on  by  a  concern  is  immaterial  if  in  fact 
tile  competing  traffic  were  not  a  negligible  part,  but  a 
substantial  part  of  the  interstate  commerce  directly  af- 
fected. U.  S.  V.  Union  Pac.  R.  R.  Co.,  226  U.  S.  61,  88-89 
(1912). 

§  86.  No    Right    to     Combine     to    Maintain    Reasonable 
Rates. 

"The  claim  that  the  company  has  the  right  to  charge 
reasonable  rates,  and  that,  therefore,  it  has  the  right  to 
enter  into  a  combination  with  competing  roads  to  main- 
tain such  rates,  cannot  be  admitted.  The  conclusion  does 
not  follow  from  an  admission  of  the  premise.  What  one 
company  may  do  in  the  way  of  charging  reasonable  rates 
is  radically  different  from  entering  into  an  agreement  with 
other  and  competing  roads  to  keep  up  the  rates  to  that 
point.  If  there  be  any  competition  the  extent  of  the 
charge  for  the  service  will  be  seriously  affected  by  that 
fact.  Competition  will  itself  bring  charges  do\ATi  to  what 
may  be  reasonable,  while  in  the  case  of  an  agreement  to 
keep  prices  up,  competition  is  allowed  no  play;  it  is  shut 
out,  and  the  rate  is  practically  fixed  by  the  companies 
themselves  by  virtue  of  the  agreement,  so  long  as  they 
abide  by  it."  {Mr.  Justice  Peckham.)  U.  S.  v.  Trans- 
Missouri  Freight  Association,  166  U.  S.  290,  339.  (C.  C. 
A.  Eighth  Circuit,  1897.) 

§  87.  Redress  from  Unreasonable  Rates  not  Limited  to  In- 
terstate Commerce  Commission. 

A  plaintiff  is  not  obliged  to  i)r()('eed  invariably  under  the 
Interstate  Commerce  Act  for  redress  in  case  of  an  un- 
reasonable rate  imposed  by  a  railroad  company.  If  such 
unreasonable  rate  is  one  of  the  means  employed  to  restrain 
trade  or  effect  a  monopoly,  there  is  no  reason  why  the 


Railroad  Transportation  43 

plaintiff  cannot  invoke  the  relief  granted  by  the  Sherman 
Act.  Meeker  v.  Lehigh  Valley  Railroad  Co.,  183  Fed.  548, 
551.  (C.  C.  A.  Second  Circuit,  1910.)  But  see  American 
Union  Coal  Co.  v.  Penn.  Ry.  Co.,  159  Fed.  278.  (C.  C— 
E.  D.  Pennsylvania,  1908.) 


CHAPTER  V 


LABOR  ORGANIZATIONS 


§  88.  Effect  of  Clayton  Act  upon  Labor  Organizations. 

By  the  sixth  section  of  the  Chxyton  Act,  it  is  provided 
that  "the  labor  of  a  human  being  is  not  a  commodity  or 
article  of  commerce,"  and  that  "nothing  contained  in  the 
anti-trust  laws  shall  ])e  construed  to  forbid  the  existence 
and  operation  of  labor,  agricultural  or  horticultiu'al  organ- 
izations, instituted  for  the  purposes  of  mutual  help,  and 
not  having  capital  stock  or  conducted  for  profit,  or  to 
forbid  or  restrain  individual  members  of  such  organiza- 
tions from  lawfully  carrying  out  the  legitimate  objects 
thereof."  So  far,  the  provision  is  merely  declaratory  of 
the  law  as  it  generally  existed  prior  to  the  Act  and  merely 
refers  to  organizations  legitimately  formed  and  not  de- 
signed to  interfere  with  the  business  and  commerce  of  the 
country.  The  section,  however,  further  provides  that 
neither  such  organizations  nor  the  members  thereof  "shall 
be  held  or  construed  to  be  illegal  combinations  or  con- 
spiracies in  restraint  of  trade  under  the  anti-trust  laws." 
This  language  is  somewhat  ambiguous  and  taken  literally 
would  seem  to  mean  that  under  no  circumstances  or  state 
of  facts  could  such  organizations  or  their  members  come 
within  the  prohibitions  of  the  laws.  But  obviously  this 
cannot  be  the  case,  and  the  language  should  be  interpreted 
to  mean  that  so  long  as  such  organizations  or  members 
thereof  did  not  substantially  monopolize  or  restrain  trade, 
and  kept  within  legitimate  bounds,  they  would  not  per  se 

44 


Labor  Okganizations  45 

1)6  illegal  combinations  or  con,si)ira('ies.  In  this  view,  it  is 
difficult  to  see  just  what  the  section  has  added  to  the 
present  law  on  the  su])ject,  and  it  would  seem  that  the 
rule  still  holds  that  there  may  be  combinations  or  con- 
spiracies of  either  capitalists  or  laborers  in  violation  of  the 
anti-trust  laws,  and  that  all  combinations  in  restraint  of 
interstate  commerce  are  forbidden  without  reference  to 
the  character  of  the  persons  who  entered  into  them.  U.  S. 
V.  Workingman's  Amalg.  Council,  54  Fed.  994,  996  (C. 
C— E.  D.  Louisiana,  1893);  U.  S.  v.  Debs,  64  Fed.  724, 
754-755  (C.  C— N.  D.  Illinois,  1894);  Address  of  Ex- 
President  Taft  to  Am.  Bar  Asso.,  Washington,  D.  C, 
Oct.  20-22,  1914.  But  see  "Labor  Legislation  in  the 
Clayton  Act"  by  Wickersham,  U.  P.  Alumni  Register, 
December,  1914. 

§  89.  Peaceful  Termination  of  Employment,  Persuasion  of 
Others,  and  Cessation  of  Patronage. 

In  the  latter  part  of  section  twenty  of  the  Clayton  Act 
appear  provisions  which  render  lawful  acts  verging  upon 
picketing,  boycotting  and  interference  with  contract,  etc., 
provided  they  are  accomplished,  peacefully,  that  is,  with- 
out force  or  violence.  This  section  provides  that  none  of 
the  following  acts  are  to  be  considered  or  held  violations 
of  any  law  of  the  United  States:  (a)  the  termination  of  any 
relation  of  employment  by  any  person  or  persons  whether 
singly  or  in  concert;  (b)  the  ceasing  of  such  persons  to 
perform  any  work  or  labor  or  the  recommending,  advising 
or  persuading  others  by  peaceful  means  so  to  do;  (c)  the 
attending  at  any  place  where  any  such  person  or  persons 
may  lawfully  be,  for  the  purpose  of  peacefully  obtaining  or 
communicating  information;  (d)  peacefully  persuading  any 
person  from  working  or  abstaining  from  working;  (e)  ceas- 
ing to  patronize  or  employ  any  party  to  such  dispute,  or 


40  Manual  of  the  Sherman  Law 

from  recommending,  advising,  or  persuading  others  by 
peaceful  and  lawful  means  so  to  do;  (f)  paying  or  giving 
to,  or  withholding  from,  any  person  engaged  in  such  dis- 
pute, any  strike  benefits  or  other  moneys  or  things  of 
value;  (g)  peacefully  assembling  in  a  lawful  manner  and 
for  lawful  purposes;  (h)  or  any  act  or  thing  which  might 
lawfully  be  done  in  the  absence  of  such  dispute  by  any 
party  thereto.  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  20. 

§  90.  Acts  of  Violence  or  Coercion  by  Laborers  or  Capitalists. 

Notwithstanding  the  al)ove  provisions,  however,  it  does 
not  appear  that  labor  organizations  or  the  members  thereof 
are  thereby''  given  unbridled  license  to  restrain  interstate 
commerce  by  acts  of  violence,  coercion,  or  intimidation, 
or  to  conspire  or  combine  for  the  accomplishment  of  any 
such  purposes,  and  it  would  seem  that  the  language  and 
holdings  of  the  prior  decisions  as  hereinafter  cited  are  still 
substantially  in  point. 

This  Sherman  Law  "was  intended  to  lay  its  strong  hand, 
not  only  upon  the  capitalists  or  monopolists  who,  by  com- 
binations, undertook  to  interfere  with  the  business  and 
commerce  of  the  country,  and  subject  them  to  punishment, 
l)ut,  on  the  other  hand,  it  also  undertook  to  say  to  the 
laboring  men  of  the  country  that  'you  shall  not  enforce 
your  rights,  however  just  they  may  be,  by  violence  and  by 
laAvlessness.'"  (Baker,  District  Judge.)  U.  S.  v.  Agler, 
62  Fed.  824,  825  (C.  C.  Indiana,  1894) ;  U.  S.  v.  Work- 
ingmen's  Amalg.  Council,  54  Fed.  994.  (C.  C. — E.  D. 
Louisiana,  1893.) 

The  Sherman  Law  covers  "any  illegal  means  by  which 
interstate  commerce  is  restrained  whether  by  unlawful 
combinations  of  capital,  or  unlawful  combinations  of  labor, 
and  whether  the  restraints  be  occasioned  by  unlawful  con- 


Labor  OiKiANizATioNs  47 

tracts,  trusts,  pooling  arrangements,  blacklists,  boycotts, 
coercion,  threats,  intimidation,  and  whether  these  be  made 
effective,  in  whole  or  in  part,  by  acts,  words,  or  printed 
matters."  (Mr.  Justice  Lamar.)  Gompers  v.  Bucks  Stove 
cfc  Range  Co.,  221  U.  S.  418,  4.38  (1910);  Eastern  States  Re- 
tail Lumber  Dealers'  Asso.  v.  U.  S.,  234  U.  S.  600,  611 
(1913). 

§  91.  Organizations  of  Fanners  or  Laborers. 

Organizations  of  farmers  or  laborers  are  not  exempt 
from  the  operation  of  the  Sherman  Anti-Trust  Act.  The 
Act  made  no  distinction  between  classes  of  people.  Loewe 
V.  Lawlor,  208  U.  S.  274,  301  (1908). 

§  92.  Compelling  Employment  of  none  but  Union  Men. 

"The  combination  setting  out  to  secure  and  compel  the 
employment  of  none  but  union  men  in  a  given  business, 
as  a  means  to  effect  this  compulsion,  finally  enforced  a  dis- 
continuance of  labor  in  all  kinds  of  business,  including  the 
business  of  transportation  of  goods  and  merchandise  which 
were  in  transit  through  the  city  of  New  Orleans,  from  state 
to  state,  and  to  and  from  foreign  countries.  When  the 
case  is  thus  stated, — and  it  must  be  so  stated  to  embody 
the  facts  here  proven, — I  do  not  think  there  can  be  any 
question  but  that  the  combination  of  the  defendants  was 
in  restraint  of  commerce."  (Billings,  District  Judge.) 
U.  S.  v.  Workingmen's  Amalg.  Council,  54  Fed.  994,  999. 
(C.  C— E.  D.  Louisiana,  1893.) 

§  93.  No  Right  to  Prevent  by  Coercion  Employment  of  Other 

Mechanics. 

"The  mechanic  is  not  obliged  by  law  to  labor  for  any 

particular  price.    He  may  say  that  he  will  not  make  coarse 

boots  for  less  than  one  dollar  per  pair;  but  he  has  no  right 


48  *  Manual  of  the  Sherman  Law 

to  say  that  no  other  mechanic  shall  make  them  for  less. 
Should  the  journeymen  bakers  refuse  to  work  unless  for 
enormous  wages,  which  the  master  bakers  could  not  af- 
ford to  pay,  and  should  they  compel  all  journeymen  in  the 
city  to  stop  work,  the  whole  population  must  be  without 
bread;  so  of  journeymen  tailors  or  mechanics  of  any  de- 
scription. Such  combinations  would  be  productive  of  de- 
rangement and  confusion,  which  certainly  must  be  in- 
jurious to  trade."  {Mr.  Chief  Justice  Savage.)  People 
V.  Fisher,  14  Wend.  18,  quoted  in  U.  S.  v.  Workingme7i's 
Amalg.  Council,  54  Fed.  994,  1000.  (C.  C— E.  D.  Louis- 
iana, 1893.) 

§  94.  Wanton  Injury  to  Property  of  Employer. 

Where  men  conspire  and  combine  together,  not  onl}^  for 
the  purpose  of  securing  better  conditions  and  wages  under 
penalty  of  quitting  the  service  if  not  secured,  but  also  to 
prevent  their  employer  from  supplying  the  places  vacated 
with  other  employees,  who  are  ready  and  willing  to  take 
their  places,  they  are  within  the  prohibitions  of  the  Act; 
such  employers  have  no  right  to  combine  and  confederate 
together  for  the  purpose  of  wantonly  injuring  and  de- 
stroying the  property  of  their  employer,  or  for  obstructing 
and  interfering  with  his  dominion  over  and  control  of  his 
private  property.  U.  S.  v.  Elliott,  64  Fed.  27,  32.  (C.  C— 
E.  D.  Missouri,  1894.) 

§  95.  Agreement  not  to  Work  in  Non-Union  Shop. 

The  mere  agreement  of  local  unions  of  carpenters  and 
joiners  throughout  the  United  States  not  to  work  on  wood- 
work coming  from  a  non-union  shop  necessarily  and  di- 
rectly restrains  interstate;  commerce  in  violation  of  the  Act. 
Irving  v.  Neal,  209  Fed.  471,  476-477.  (D.  C— E.  D. 
New  York,  1913.) 


liAnOli    OiKJANlZATIONS  49 

§  96.  Employees  of  Railroad  Companies. 

Where  the  employees  of  the  PuUman  Palace  Car  Com- 
pany left  its  employ  because  of  a  reduction  of  wages,  and 
later  joined  a  railway  union  the  members  of  which  had 
voted  to  take  measures  to  compel  the  said  company  to  re- 
employ such  employees,  and  where  in  case  of  refusal  every 
effort  by  said  union  including  said  employees  was  to  be 
made  to  force  the  railroad  companies  to  refuse  to  haul  the 
cars  of  the  Pullman  Company  until  such  demands  were 
complied  with,  and  intimidation  and  secret  terrorism  were 
exercised  to  accomplish  such  purposes,  the  combination 
thereby  effected  is  unlawful  and  is  a  conspiracy  within  the 
Sherman  Law.  Thomas  v.  Cincinnali,  N.  0.  &  T.  P.  Ry. 
Co.,  62  Fed.  803.    (C.  C— S.  D.  Ohio,  1894.) 

§  97.  Arresting  Operation  of  Railroad. 

"A  combination  whose  professed  object  is  to  arrest  the 
operation  of  railroads  whose  lines  extend  from  a  great  city 
into  adjoining  states,  until  such  roads  accede  to  certain 
demands  made  upon  them,  whether  such  demands  are  in 
themselves  reasonable  or  unreasonable,  just  or  unjust,  is 
certainly  an  unlawful  conspiracy  in  restraint  of  commerce 
among  the  states."  (Thayer,  District  Judge.)  U.  S.  v. 
Elliott,  62  Fed.  801,  803  (C.  C— E.  D.  Missouri,  E.  D. 
1894);  U.  S.  V.  Elliott,  64  Fed.  27,  33.  (C.  C— E.  D. 
Missouri,  1894.) 

§  98.  Restrictive  Rule  of  Association  of  Locomotive  En- 
gineers. 
A  rule  of  a  certain  brotherhood  of  locomotive  engineers 
to  the  effect  that  no  member  shall  handle  property  belong- 
ing to  any  railroad  company,  with  which  the  said  brother- 
hood may  be  at  issue,  in  any  way  that  may  benefit  said 
company,  until  the  differences  have  been  amicably  settled, 


50  Manual  of  the  Sherman  Law 

is  in  direct  and  positivo  violation  of  the  laws  of  the  land, 
and  an  agreement  in  restraint  of  commerce  within  section 
one  of  the  Sherman  Law.  Waterhouse  v.  Comer,  55  Fed. 
149,  155-156.    (C.  C— W.  D.  Georgia,  S.  D.  1893.) 

§  99.  Equal  Protection  to  Labor  and  Capital. 

"  Under  our  Constitution  and  laws,  no  undue  advantages 
are  given  either  to  capital  or  labor,  nor  will  the  courts  ever 
permit  individuals  or  labor  organizations  by  force,  fraud 
or  intimidation  to  prevent  the  mineowner  from  lawfully 
protecting  his  rights;  but,  while  this  is  true,  equal  protec- 
tion should  be  guaranteed  to  labor  and  capital."  (Pritch- 
ard.  Circuit  Judge.)  Mitchell  v.  Hitchman  Coal  &  Coke 
Co.,  214  Fed.  685,  704.    (C.  C.  A.  Fourth  Circuit,  1914.) 

§  100.  Lawful  and  Peaceable  Methods. 

"In  no  instance  should  a  union  be  restrained  from  using 
laAvful  and  peaceable  methods  for  the  purpose  of  maintain- 
ing its  organization,  but,  while  this  is  true,  the  court  should 
restrain  those  who  by  violence,  coercion,  and  intimidation 
seek  to  deprive  the  mineoAvner  of  the  right  to  use  his  prop- 
erty as  he  sees  fit."  (Pritchard,  Circuit  Judge.)  Mitchell 
V.  Hitchman  Coal  &  Coke  Co.,  214  Fed.  685,  716.  (C.  C.  A. 
Fourth  Circuit,  1914.) 

§  101.  Right  to  Strike  Peaceably. 

"The  right  of  men  to  strike  peaceably  and  the  right  to 
advise  a  peaceable  strike,  which  the  law  does  not  presume 
to  be  impossible,  is  not  questioned.  But  if  men  enter  into 
a  conspiracy  to  do  an  unlawful  thing,  and,  in  order  to 
accomplish  their  purpose,  advise  workmen  to  go  upon  a 
strike,  knowing  that  violence  and  wrong  will  be  the 
probable  outcome,  neither  in  law  nor  in  morals  can  they 
escape  responsibility."  (Woods,  Circuit  Judge.)  U.  S. 
V.  Debs,  64  Fed.  724,  763.    (C.  C— D.  N.  Illinois,  1894.) 


Labor  Oikmnizations  51 

§  102.  Ceasing  to  Work  at  Will  of  Union. 

A  rule  of  a  labor  union  is  not  unlawful  which  requires  its 
members  to  cease  to  work  whenever  called  upon  by  the 
organization.  "Common  experience  teaches  us  that  a 
rule  of  this  character  is  essential  for  the  preservation  of 
labor  organizations.  Without  a  provision  of  this  kind, 
there  would  be  no  power  of  securing  concert  of  action;  no 
means  by  w^hich  united  effort  could  be  secured  for  the 
accomplishment  of  the  aims  and  purposes  of  the  organiza- 
tion. In  the  absence  of  proof  to  the  contrary  it  must  be 
assumed  that  this  power  would  be  exercised  wisely,  and 
only  when  necessary  to  promote  the  interest  of  the  organ- 
ization in  a  legitimate  manner."  (Pritchard,  Circuit 
Judge.)  Mitchell  v.  Hitchman  Coal  &  Coke  Co.,  214  Fed. 
685,  700-701.    (C.  C.  A.  Fourth  Circuit,  1914.) 

§  103.  Presumption  of  Employment  of  only  Lawful  Methods. 

''It  has  been  repeatedly  held  by  the  courts  that  a  labor 
union  may  use  all  lawful  methods  for  the  purpose  of  in- 
ducing others  to  join  its  order,  and,  until  the  contrary  is 
shoAvn,  it  must  be  assumed  that  only  lawful  methods  are 
to  be  employed  for  the  accomplishment  of  such  purpose." 
(Pritchard,  Circuit  Judge.)  Mitchell  v.  Hitchman  Coal  & 
Coke  Co.,  214  Fed.  685,  702.  (C.  C.  A.  Fourth  Circuit, 
1914.) 

§  104.  Enjoining  from  Quitting  Service. 

While  a  court  of  equity  has  no  right  under  any  circum- 
stances by  injunction,  to  prevent  one  individual  from 
quitting  the  service  of  another,  the  recognition  by  the 
court  of  such  right  gives  no  warrant  to  any  one  to  in- 
timidate or  aliuse  any  individual  Avho  is  willing  to  take 
employment,  or  to  interfere  directly  with  the  management 
and  operation  of  the  business  in  which  such  individual  is 


52  Manual  of  the  Sherman  Law 

employed.    U.  S.  v.  Debs,  64  Fed.  724,  763,  766.    (C.  C— 
N.  D.  Illinois,  1894.) 

§  105.  Resort  to  Coercion,  Threats,  Intimidation  or  Violence. 

"If  the  United  Mine  Workers  of  America  .  .  .  should 
resort  to  coercion,  threats,  intimidation,  or  violence  for  the 
inirpose  of  preventing  the  mineowner  from  employing 
non-union  men,  such  conduct  would  be  unlawful,  and  the 
courts  would  promptly  restrain  any  one  who  might  be  a 
party  to  such  transaction.  Indeed  it  would  be  unlawful 
for  an  individual  to  undertake,  ])y  coercion,  intimidation, 
or  threats  to  prevent  a  mineowner  from  exercising  his 
Q-wTi  free  will  as  to  the  employment  of  non-union  laborers, 
or  as  to  any  other  thing  which  he  might  deem  necessary 
to  be  done  in  order  to  i)rotect  his  property  rights." 
(Pritchard,  Circuit  Judge.)  Mitchell  v.  Hitchman  Coal  & 
Coke  Co.,  214  Fed.  685,  703.  (C.  C.  A.  Fourth  Circuit, 
1914.) 

§  106.  Black  Listing  by  Labor  Unions  of  Unfair  Dealers. 

"Irrespective  of  compulsion  or  even  agreement  to  ol)- 
serve  its  intimation,  the  circulation  of  a  list  of  'unfair 
dealers,'  manifestly  intended  to  put  the  ban  upon  those 
whose  names  appear  therein,  among  an  important  body 
of  possible  customers  combined  with  a  view  to  joint  action 
and  in  anticipation  of  such  reports,  is  within  the  Sherman 
Act  if  it  is  intended  to  restrain  and  restrains  commerce 
among  the  States."  (Mr.  Justice  Holmes.)  Lawlor  v. 
Loewe,  235  U.  S.  522,  534  (1915). 


CHAPTER  VI 

GENERAL    CONSTRUCTION    OF   THE    ENUMERATED    OFFENSES 

§  107.  Growing  Liberality  of  Construction. 

Since  the  passage  of  the  Sherman  Law  in  1890,  it  has 
been  the  constant  endeavor  of  defendants  to  restrict 
the  scope  of  its  provisions  and  to  narrow  the  field  of  its 
appHcation.  In  such  effort  they  were  at  first  apparently 
successful  and  prosecutions  under  the  Act  were  discour- 
aged, but  as  time  has  gone  on,  there  has  been  an  ever 
increasing  tendency  on  the  part  of  the  courts  so  to  inter- 
pret the  statute  as  to  repress  the  evil  it  was  designed  to 
reach  and  apply  the  remedy,  and  to  disregard  so  far  as 
possible  formal  or  inconsequential  considerations. 

Although  such  tendency  has  been  most  marked  in  civil 
proceedings  it  is  beginning  to  appreciably  influence  the 
construction  placed  upon  criminal  indictments,  in  view"  of 
the  vast,  growing  and  threatening  influence,  exerted  by 
great  combinations  of  capital  and  the  constant  concentra- 
tion of  business  enterprises  effected  thereby.  In  some  dis- 
tricts, however,  the  strictness  of  construction  called  for 
at  common  law  is  rigidly  adhered  to  in  all  criminal  actions 
instituted  under  the  Act  almost  without  exception,  al- 
though even  in  such  jurisdictions  in  civil  causes,  the  men- 
ace to  the  people  and  the  potential  power  for  injury  of 
illegal  combinations  appears  to  be  recognized  and  dealt 
with  accordingly. 

The  offenses  prohibited  by  the  Act  are  mainly  set  forth 
in  sections  one  and  two,  the  boundaries  and  entire  length 

53 


54  Manual  of  the  Sherman  Law 

and  breadth  of  which  have  often  ])een  disputed  territory 
in  the  federal  courts.  The  language  of  these  sections  is 
as  follows: 

§  108.  First  Section  (Restraint  of  Trade). 

"  Every  contract,  combination  in  the  form  of  trust  or 
otherwise,  or  conspiracy,  in  restraint  of  trade  or  commerce 
among  the  several  states,  or  with  foreign  nations,  is  hereby 
declared  to  be  illegal.  Every  person  who  shall  make  any 
such  contract  or  engage  in  any  such  combination  or  con- 
spiracy, shall  be  deemed  guilty  of  a  misdemeanor,  and, 
on  conviction  thereof,  shall  be  punished  by  fine  not  ex- 
ceeding five  thousand  dollars,  or  })y  imprisonment  not 
exceeding  one  year,  or  })y  both  such  punishments,  in  the 
discretion  of  the  court." 

§  109.  Second  Section  (Monopoly). 

"  Every  person  who  shall  monopolize,  or  attempt  to 
monopolize,  or  combine  or  conspire  with  any  other  person 
or  persons,  to  monopolize  any  part  of  the  trade  or  com- 
merce among  the  several  states,  or  with  foreign  nations, 
shall  be  deemed  guilty  of  a  misdemeanor,  and,  on  convic- 
tion thereof,  shall  be  punished  by  fine  not  exceeding  five 
thousand  dollars,  or  by  imprisonment  not  exceeding  one 
year,  or  by  both  said  punishments,  in  the  discretion  of  the 
court." 

§  110.  Modes  of  Giving  Effect  to  the  Law. 

Since  the  passage  of  the  Clayton  Act,  there  are  now  six 
modes  in  which  effect  may  be  given  in  whole  or  in  part 
to  the  provisions  of  the  anti-trust  laws,  (1)  by  a  criminal 
proceeding;  (2)  by  a  suit  in  equity  brought  by  the  govern- 
ment; (3)  by  a  ])roceeding  in  equity  under  the  Clayton  Act 
in  behalf  of  a  person,  firm,  cori)oration  or  association; 


Construction  of  Enumerated  Offenses        55 

(4)  by  a  proceeding  for  forfeiture  in  the  name  of  the  United 
States;  (5)  by  a  law  action  by  a  person  or  corporation  for 
the  recovery  of  treble  damages;  and  (6)  by  proceedings  to 
enforce  compliance  with  certain  sections  of  the  Clayton 
Act  instituted  V)y  the  commission  or  board  having  jurisdic- 
tion. The  Sherman  Law  (Act  of  July  2,  1890),  Sects.  4,  6, 
and  7;  The  Clayton  Act  (Act  of  Oct.  15,  1914),  Sects.  4,  11, 
15  and  16. 

§  111.  Constitutionality. 

It  is  well  settled  that  the  Sherman  Law  as  a  criminal 
statute  is  constitutional,  and  that  there  is  no  constitutional 
difficulty  in  the  way  of  enforcing  its  provisions  on  the 
ground  of  uncertainty.  Nash  v.  U.  S.,  229  U.  S.  373,  377- 
378  (1913);  U.  S.  v.  New  Departure  Co.,  204  Fed.  107,  114 
(D.  C— W.  D.  New  York,  1913);  U.  S.  v.  Patterson,  201 
Fed.  697,  706-715  (D.  C— S.  D.  Ohio,  W.  D.  1912); 
U.  S.  V.  Winslow,  195  Fed.  578,  584.    (D.  C.  Mass.  1912.) 

§  112.  Primary  Object  of  Statute. 

"The  primary  object  of  the  statute  was  undoubtedly 
to  prevent  the  destruction  of  legitimate  and  healthy  com- 
petition in  interstate  commerce  by  individuals,  corpora- 
tions, and  trusts  grasping,  engrossing  and  monopolizing 
the  markets  for  commodities."  (Morrow,  District  Judge.) 
In  re  Grand  Jury,  62  Fed.  840,  841.  (D.  C— N.  D. 
California,  1894.) 

§  113.  Fear  of  Powerful  Combinations. 

"  It  may  well  be  assumed  that  Congress  when  enacting 
that  statute  (the  Sherman  Act) ,  shared  the  general  appre- 
hension that  a  few  powerful  corporations  or  combinations 
sought  to  obtain,  and,  unless  restrained,  would  obtain 
such  absolute  control  of  the  entire  trade  and  commerce 


56  Manual  of  the  Sherman  Law 

of  the  country  as  would  be  detrimental  to  the  general 
welfare."  (Mr.  Justice  Harlan.)  No.  Securities  Co.  v. 
U.  S.,  193  U.  S.  197,  339  (1904). 

§  114.  Power  of  Congress  Exclusive. 

"The  I30wer  of  Congress  to  regulate  commerce  among 
the  several  States  is  also  exclusive.  The  Constitution 
does  not  provide  that  interstate  commerce  shall  be  free, 
but,  by  the  grant  of  this  exclusive  power  to  regulate  it,  it 
was  left  free  except  as  Congress  might  impose  restraints." 
(Mr.  Chief  Justice  Fuller.)  U.  S.  v.  E.  C.  Knight,  156 
U.  S.  1,  11  (1895). 

§  116.  Public  Welfare  the  First  Consideration. 

The  public  welfare  is  the  first  consideration  to  which  the 
courts  will  look,  and  then  the  question  of  whether  the 
restraint  upon  the  one  party  is  or  is  not  greater  than  the 
protection  of  the  other  requires.  When  the  contract  en- 
croaches upon  the  rights  of  the  public  and  transgresses 
the  liberty  of  free  competition,  public  welfare  Ijecomes 
paramount  and  must  predominate  over  any  individual 
right  to  contract.  Anderson  v.  Shawnee  Compress  Co.,  87 
Pac.  315,  317.    (Oklahoma  Supreme  Court,  1906.) 

§  116.  "Whole  Statute  must  be  Taken  Together. 

"Moreover,  it  is  important  to  note  the  rule  that  this 
whole  statute  must  be  taken  together.  The  second  sec- 
tion is  limited  by  its  terms  to  monopolies,  and  evidently 
has  as  its  basis  the  engrossing  or  controlling  of  the 
market.  The  first  section  is  undoubtedly  in  pari  materia, 
and  so  has  as  its  basis  the  engrossing  or  controlling  of 
the  market,  or  of  lines  of  trade."  (Putnam,  Circuit 
Judge.)  U.  S.  v.  Patterson,  55  Fed.  605,  640.  (C,  C. 
Mass.  1893.) 


Construction  of  Enumerated  Offenses        57 

§  117.  Historical  Environment. 

"In  construiuf^  statutes  the  courts  shall  not  close  their 
eyes  to  what  they  know  of  the  history  of  the  country  and 
of  the  law,  of  the  condition  of  the  law  at  a  particular  time, 
of  the  public  necessities  felt,  and  other  kindred  things, 
for  the  reason  that  regard  must  be  had  to  the  words  in 
which  the  statute  is  expressed  as  applied  to  the  facts 
existing  at  the  time  of  its  enactment."  (Sater,  District 
Judge.)  Mannington  v.  Hocking  Valley  Ry.  Co.,  183  Fed. 
133,  154.    (C.  C— S.  D.  Ohio  E.  D.  1910.) 

§  118.  Debates  in  Congress. 

"It  is  apparently  settled  law  that  we  cannot  take  the 
views  or  purposes  expressed  in  debate  as  supplying  the 
construction  of  statutes.  In  U.  S.  v.  Union  Pacific  R. 
Co.,  91  U.  S.  72-79,  and  elsewhere,  the  supreme  court  has 
laid  down  this  rule.  But  this  does  not  at  all  touch  the 
question  whether  or  not  one  can  gather  from  the  debates 
in  congress,  as  he  can  from  any  other  source,  the  history 
of  the  evil  which  the  legislation  was  intended  to  remedy." 
(Putnam,  Circuit  Judge.)  U.  S.  v.  Patterson,  55  Fed. 
605,  641.    (C.  C— Mass.  1893.) 

"There  is,  too,  a  general  acquiescence  in  the  doctrine 
that  deljates  in  Congress  are  not  appropriate  sources  of 
information  from  which  to  discover  the  meaning  of  the 
language  of  a  statute  passed  ])y  that  body.  U.  S.  v. 
Union  Pacific  Railroad  Company,  91  U.  S.  72,  79;  Aldindge 
V.  Williams,  3  How.  9,  24,  Taney,  Chief  Justice;  Mitchell 
V.  Great  Works  Milling  &  Manufacturing  Company,  2 
Story,  648,  653;  Queen  v.  Hartford  College,  3  Q.  B.  D.  693, 
707."  {Mr.  Justice  Peckham.)  U.  S.  v.  Freight  Assn., 
166  U.  S.  290,  318  (1897). 

While  debates  may  not  ])e  used  as  a  means  for  interpret- 
ing a  statute,  debates  may  nevertheless  be  resorted  to  as 


58  Manual  of  the  Sherman  Law 

a  means  of  ascertaining  the  environment  at  the  time  said 
statute  was  enacted.  Siandard  Oil  Co.  v.  U.  S.,  221  U.  S. 
1,  49  (1911);  U.  S.  V.  Trans-Missouri  Freight  Assn.,  166 
U.  S.  290,  318  (1897). 

§  119.  Necessary  Restriction  of  Meaning  of  General  Words. 
''Our  attention  is  also  called  to  one  of  the  rules  for  the 
construction  of  statutes  which  has  been  approved  by  this 
court;  that  while  it  is  the  duty  of  courts  to  ascertain  the 
meaning  of  the  legislation  from  the  words  used  in  the 
statute  and  the  subject-matter  to  which  it  relates,  there 
is  an  equal  duty  to  restrict  the  meaning  of  general  words, 
whenever  it  is  found  necessary  to  do  so  in  order  to  carry  out 
the  legislative  intent."  {Mr.  Justice  Peckham.)  U.  S.  v. 
Freight  Assn.,  166  U.  S.  290,  320  (1897). 

§  120.  Intent  of  Statute. 

"In  the  construction  of  statute,  the  intent  of  the  law- 
makers must  be  found  in  the  statutes  themselves.  The 
first  resort  is  to  the  natural,  ordinary,  familiar  significa- 
tion of  the  words  employed.  If  a  law  is  plain  and  unam- 
biguous, ...  it  must  be  held  that  the  law-making  botly 
meant  what  it  plainly  expressed."  (Sater,  District  Judge.) 
Mannington  v.  Hocking  Valley  Ry.  Co.,  183  Fed.  133,  155. 
(C.  C— S.  D.  Ohio,  E.  D.  1910.) 

§  121.  Literal  Construction  of  Statute. 

A  legislative  act  should  not  be  construed  "in  a  literal 
manner  where  it  is  clear  that  by  such  construction  the 
legislative  purpose  will  be  defeated."  Accordingly  "the 
language  of  the  (Sherman)  Anti-Trust  Act  is  not  to  re- 
ceive that  literal  construction  which  Avill  impair  rather 
than  enhance  the  freedom  of  interstate  commerce." 
(Lanning,  Circuit  Judge.)  U.  S.  v.  Du-Pont  De  Nemours 
&  Co.,  188  Fed.  127,  149,  151.    (C.  C.  Delaware,  1911.) 


Construction  of  Enumerated  Offenses        59 

§  122.  General  Expressions  in  Legal  Decisions. 

"It  is  a  maxim,  nut  to  be  disregarded,  that  general  ex- 
pressions in  every  opinion  are  to  be  taken  in  connection 
with  the  case  in  which  those  expressions  are  used.  If  they 
go  beyond  the  case,  they  may  be  respected,  but  ought 
not  to  control  the  judgment  in  a  subsequent  suit  when  th(^ 
very  point  is  presented  for  decision.  The  reason  for  this 
maxim  is  obvious.  The  question  actually  before  the  court 
is  investigated  with  care,  and  considered  in  its  full  extent. 
Other  principles  which  may  serve  to  illustrate  it  are  con- 
sidered in  their  relation  to  the  case  decided,  but  their 
possible  bearing  on  all  cases  is  seldom  completely  in- 
vestigated." (Mr.  Chief  Justice  Marshall.)  Cohens  v. 
Virginia,  6  Wheat.  264,  340,  399,  quoted  by  Taft,  Circuit 
Judge,  in  U.  S.  v.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271, 
300.    (C.  C.  A.  Sixth  Circuit,  1898.) 

The  rule  is  settled  that  "general  expressions  in  an  opin- 
ion, which  are  not  essential  to  dispose  of  a  case,  are  not 
permitted  to  control  the  judgment  of  subsequent  suits." 
(Mr.  Chief  Justice  Fuller.)  Harriman  v.  Northern  Se- 
curities Co.,  197  U.  S.  244,  291  (1905). 

§  123.  Lateness  of  Enactment. 

"The  fact  that  Congress  did  not  enact  the  statute  above 
recited  until  1890,  is  no  argument  against  the  existence  of 
its  power.  Many  powers  lodged  by  the  constitution  in  the 
legislative  department  long  lie  dormant,  until  the  exigency 
arises  to  invoke  them  into  activity."  (Philips,  District 
Judge.)  U.  S.  v.  Elliott,  64  Fed.  27,  34.  (C.  C— E.  D. 
Missouri,  1894.) 

§  124.  Statute  Covers  all  Illegal  Means  for  Restraining  In- 
terstate Commerce. 
The  statute  covers  any  illegal  means  by  which  inter- 


60  Manual  of  the  Sherman  Law 

state  commerce  may  be  restrained,  whether  the  restraint 
he  occasioned  hy  vinhiAvful  comliinations  of  capital  or  un- 
lawful combinations  of  labor,  and  whether  the  restraint 
be  occasioned  l\y  unlawful  contracts,  trusts,  pooling  ar- 
rangements, l)lack  lists,  l)oycotts,  coercion,  threats,  in- 
timidation, and  whether  these  be  made  effective,  in  whole 
or  in  part,  by  acts,  words  or  printed  matter.  Gompers  v. 
Bucks  Stove  &  Range  Co.,  221  U.  S.  418,  438  (1911). 

§  125.  Undue  Restraint  of  Competition  or  Trade. 

The  Standard  Oil  Co.  and  American  Tobacco  Co.  Cases 
"may  be  taken  to  have  established  that  only  such  con- 
tracts and  combinations  are  within  the  act  as,  by  reason  of 
intent  or  the  inherent  nature  of  the  contemplated  acts, 
prejudice  the  public  interests  by  undidy  restricting  competi- 
tion or  unduly  obstructing  the  course  of  ti-ade."  {Mr. 
Justice  Holmes.)  (Italics  mine.)  Nash  v.  U.  S.,  229 
U.  S.  373,  376  (1913). 

"The  act  is  intended  to  reach  combinations  and  con- 
spiracies which  restrain  freedom  of  action  in  interstate 
trade  and  commerce  and  undidy  suppress  or  restrict  the 
play  of  competition  in  the  conduct  thereof."  (Mr.  Justice 
Day.)  (Italics  mine.)  U.  S.  v.  Union  Pacific  R.  R.  Co., 
226  U.  S.  61,  82  (1912). 

"To  preserve  from  undue  restraint  the  free  action  of 
competition  in  interstate  commerce  was  the  purpose  which 
controlled  Congress  in  enacting  this  statute,  and  the  courts 
should  construe  the  law  with  a  view  to  effecting  the  object 
of  its  enactment."  {Mr.  Justice  Day.)  U.  S.  v.  Union 
Pacific  R.  R.  Co.,  226  U.  S.  61,  87  (1912). 

It  is  not  sufficient  merely  to  show  that  an  alleged  agree- 
ment restrained  trade;  in  order  to  warrant  a  conviction 
under  the  Sherman  Act,  there  must  be  not  only  a  restraint 
of  trade  but  an  untlue  restraint.     It  must  be  shown  that 


Construction  of  ENUMfmATED  Offenses        61 

the  restraint  was  an  unreasonable  one  in  order  to  be  pro- 
hibited by  the  Act.  U.  S.  v.  Whiting,  212  Fed.  466,  473 
et  seq.  (D.  C.  Mass.  1914.) 

"Contracts  and  methods  of  business,  which  do  in  fact 
restrain  or  interfere  with  competition,  are  not  to  be  held 
obnoxious  to  the  provisions  of  the  act,  unless  such  restraint 
or  interference  is  'unreasonable'  or  'undue.'"  (Lacombe, 
Circuit  Judge.)  U.  S.  v.  Hamhurg-Americon  S.  S.  Line, 
216  Fed.  971,  972.    (D.  C— S.  D.  New  York,  1914.) 

§  126.  Unreasonably  Restrictive  of  Competitive  Conditions. 

The  Sherman  Law  must  l)e  cuustrued  as  intended  to 
reach  only  such  acts,  contracts,  agreements  or  combina- 
tions which  are  unduly  restrictive  of  the  flow  of  commerce, 
or  unduly  restrictive  of  competition,  all  contracts,  acts, 
etc.,  which  are  unreasonably  restrictive  of  competitive 
conditions  being  classed  as  illegal.  Eastern  States  Lumber 
Ass7i.  V.  U.  S.,  234  U.  S.  600,  610  (1914);  Nash  v.  United 
States,  229  U.  S.  373,  376  (1913) ;  Standard  Oil  Co.  v.  U.  S., 
221  U.  S.  1,  58  (1911). 

§  127.  Restraint  of  Competition. 

"There  is  a  distinction  between  restraint  of  competition 
and  restraint  of  trade.  The  latter  expression  had,  when 
the  Anti-Trust  Act  was  passed,  a  definite  legal  signification. 
Not  every  combination  in  restraint  of  competition,  was, 
in  a  legal  sense,  in  restraint  of  trade.  ...  It  is  undoubt- 
edly the  policy  of  the  statute  that  competitive  conditions 
in  interstate  trade  should  be  maintained  wherever  their 
abolition  would  tend  to  suppress  or  diminish  such  trade. 
But  this  being  true  does  not  read  into  the  statute  a  de- 
nunciation of  all  agreements  that  may  restrain  competition 
without  regard  to  their  purpose  or  direct  effect  to  restrain 
trade  or  commerce  among  the  several  states.  .  .  .    There 


G2  Manual  of  the  Sherman  Law 

may  l)e,  under  the  Anti-Trust  Act  restraint  of  competi- 
tion that  does  not  amount  to  restraint  of  interstate  trade, 
just  as  before  the  passage  of  the  act  there  might  have  been 
restraint  of  competition  that  did  not  amount  to  a  common 
law  restraint  of  trade."  (Lanning,  Circuit  Judge.)  U.  S. 
V.  E.  I.  Du  Pont  De  Nemours  &  Co.,  188  Fed.  127,  150-151. 
(C.  C.  Delaware,  1911.) 

§  128.  Suppression  of  Competition. 

"Suppression  of  competition,  where  the  parties  to  a 
combination  control  a  large  portion  of  the  interstate  or 
foreign  commerce  in  the  article,  and  where  there  is  no 
obligation  to  form  the  combination  arising  out  of  the  fact 
that  the  parties  to  the  same  are  losing  money,  or  the  like, 
has  been  held  to  be  an  undue  restraint  of  trade."  (Smith, 
Circuit  Judge.)  U .  S.  v.  International  Harvester  Co.,  214 
Fed.  987,  998.    (D.  C.  Minnesota,  1914)  and  cases  cited. 

§  129.  Act  is  Broader  than  the  Common  Law. 

Whatever  may  be  the  meaning  given  to  monopoly  or 
restraint  of  trade  or  the  precise  offenses  set  forth  in  sections 
one  and  two,  it  would  appear  that  the  Act  must  be  given  a 
broader  application  than  the  mere  non-enforcement  or 
prohibition  of  restraints,  illegal  at  common  law,  there 
being  now  embraced  every  conceivable  act  which  could 
possibly  come  within  the  spirit  or  purpose  of  prohibitions 
of  the  law  without  regard  to  the  garb  in  which  such  acts 
were  clothed.  U.  S.  v.  American  Tobacco  Co.,  221  U.  S. 
106,  181  (1911). 

The  decisions  of  the  federal  courts  prior  to  the  Standard 
Oil  Company  and  American  Tobacco  Co.  Cases  enunciate 
very  clearly  the  view  that  the  Sherman  Act  has  a  broader 
application  than  the  prohibition  of  restraints  of  trade  at 
common  law.    Loewe  v.  Lawlor,  208  U.  S.  274,  297  (1908), 


Construction  of  Enumerated  ()ffensp:s        63 

citing:  Northern  Securities  Co.  v.  U.  S.,  193  U.  S.  197  (1904); 
U.  S.  V.  Joint  Traffic  Assn.,  171  U.  S.  505  (1898);  U.  S.  v. 
Trans-Missouri  Freight  Assn.,  166  U.  S.  290  (1897). 

§  130.  Abatement  of  Evil  and  Application  of  Remedy. 

It  is  the  duty  of  the  court  so  to  construe  the  Act  as  to 
repress  the  evil  and  apply  the  remedy.  The  evil  aimed  at 
is  of  such  national  importance  that  the  remedies  provided 
for  its  punishment  and  repression  should  not  be  unduly 
restricted  or  limited  by  precise  definition.  The  public 
policy  embodied  in  the  statute  must  be  applied  and  en- 
forced regardless  of  disguise  or  subterfuge  of  form.  Stand- 
ard Oil  Co.  V.  U.  S.,  221  U.  S.  1,  61,  63-64  (1911);  U.  S.  v. 
Am.  Tobacco  Co.,  221  U.  S.  106,  180-181  (1911);  Ware- 
Kramer  Tobacco  Co.  v.  Am.  Tobacco  Co.,  178  Fed.  117,  125. 
(C.  C— E.  D.  North  Carolina,  1910.) 

The  Act  should  be  so  construed  as  to  effectuate  the 
purposes  for  which  it  was  enacted  and  the  mischief  it  was 
passed  to  destroy  must  be  reached  and  abated.  American 
Biscuit,  etc.,  Co.  v.  Klotz,  44  Fed.  721,  725.  (C.  C— E.  D. 
Louisiana,  1891);  Monarch  Tobacco  Works  v.  Am.  Tobacco 
Co.,  165  Fed.  774,  778  (C.  C— W.  D.  Kentucky,  1908); 
U.  S.  V.  Standard  Oil  Co.,  173  Fed.  177,  191.  (C.  C— E.  D. 
Missouri,  E.  D.  1909.) 

§  131.  Generic  Enumeration  of  Offenses  in  Act. 

"The  merely  generic  enumeration  which  the  statute 
makes  of  the  acts  to  which  it  refers,  and  the  absence  of  an}^ 
definition  of  restraint  of  trade  as  used  in  the  statute  leaves 
room  for  but  one  conclusion,  which  is,  that  it  was  expresshj 
designed  not  to  undidy  limit  the  application  of  the  act  by 
precise  definition,  but  while  clearly  fixing  a  standard,  that 
is,  by  defining  the  ulterior  boundaries  which  could  not  be 
transgressed  with  impunity,  to  leave  it  to  be  determined  by 


G4  Manual  of  the  Sherman  Law 

the  light  of  reason,  guided  by  the  principles  of  law  and  the 
duty  to  apply  and  enforce  the  public  policy  embodied  in 
the  statute,  in  every  given  case  whether  any  particular  act 
or  contract  was  within  the  contemplation  of  the  statute." 
(Mr.  Chief  Justice  White.)  (Italics  mine.)  Standard  Oil 
Co.  V.  U.  S.,  221  U.  S.  1,  63-64  (1911). 

The  general  language  of  the  act  indicates  that  "Congress 
being  unable  to  foresee  and  describe  all  the  plans  that 
might  be  formed  and  all  the  expedients  that  might  be  re- 
sorted to  to  place  restraints  on  interstate  commerce,  de- 
liberately employed  words  of  such  general  import  as,  in  its 
opinion,  would  comprehend  every  scheme  that  might  be 
devised  to  accomplish  that  end."  (Thayer,  Circuit  Judge.) 
U.  S.  V.  Northern.  Securities  Co.,  120  Fed.  721,  724.  (C.  C. 
Minnesota,  Third  Division,  1903.) 

§  132.  Free  Flow  of  Commerce  must  not  be  Impeded. 

"The  Act  i^rohibits  any  combination  whatever  to  secure 
action  which  essentially  obstructs  the  free  flow  of  commerce 
between  the  states,  or  restricts,  in  that  regard,  the  liberty 
of  a  trader  to  engage  in  business."  (Mr.  Chief  Justice 
Fuller.)  Loewe  v.  Lawlor,  208  U.  S.  274,  293  (1908); 
U.  S.  V.  Am.  Tobacco  Co.,  221  U.  S.  106,  179-180 
(1911). 

"The  clear  and  positive  purpose  of  the  statute  must  be 
understood  to  be  that  trade  and  commerce  within  the 
jurisdiction  of  the  federal  government  shall  be  absolutely 
free,  and  no  contract  or  combination  will  be  tolerated  that 
impedes  or  restricts  their  natural  flow  and  volume." 
(Morrow,  Circuit  Judge.)  U.  S.  v.  Coal  Dealers'  Assn., 
85  Fed.  252,  262.    (C.  C.— N.  D.  California,  1898.) 

"The  act  is  intended  to  reach  combinations  and  con- 
spiracies which  restrain  freedom  of  action  in  interstate 
trade  and  commerce  and  unduly  suppress  or  restrict  the 


Construction  of  Enumerated  Offenses        65 

play  of  competition  in  the  conduct  thereof."  {Mr.  Jus- 
tice Day.)  U.  S.  v.  Union  Pac.  Ry.  Co.,  226  U.  S.  61, 
82  (1912). 

§  133.  All  Circumstances  Taken  into  Account. 

"  In  passing  upon  the  question  of  unreasonable  restraint, 
all  the  circumstances  surrounding  the  alleged  agreement 
or  combination  are  to  be  taken  into  account.  And,  while 
the  standard  of  conduct  'in  its  nature  and  theory  is  a  ques- 
tion of  law,'  .  .  .  where  the  facts  are  in  dispute  the  ques- 
tion will  ordinarily  be  one  for  the  jury  to  decide  under 
suitable  instructions."  (Morton,  District  Judge.)  U.  S. 
V.  Whiting,  212  Fed.  466,  474.    (D.  C.  Mass.  1914.) 

Contracts  containing  covenants  in  restraint  of  trade 
must  be  "judged  according  to  their  circumstances  and 
can  only  be  rightly-  judged  when  the  reasons  and  grounds 
of  the  rule  (of  the  construction  of  such  contracts)  are 
carefully  considered."  {Mr.  Justice  Bradley.)  Oregon 
Steam  Nav.  Co.  v.  Winsor,  20  Wall.  64,  68  (1873) ;  Anderson 
V.  Shawnee  Corn-press  Co.,  87  Pac.  315,  317.  (Oklahoma 
Supreme  Court,  1906.) 

§  134.  Effect  upon  both  Consumers  and  Competitors. 

"In  determining  whether  a  combination  restrains  inter- 
state commerce,  it  is  not  only  the  effect  upon  consumers 
which  is  to  be  considered,  but,  as  well,  the  effect  upon 
others  in  the  business,  who,  from  choice  or  necessity  are 
left  outside  of  the  organization."  (Day,  Circuit  Judge.) 
Chesapeake  &  0.  Fuel  Co.  v.  U.  S.,  115  Fed.  610,  623. 
(C.  C.  A.  Sixth  Circuit,  1902.) 

§  135.  Legitimate  Competition  not  Forbidden. 

The  act  "was  enacted,  not  to  stifle,  but  to  foster,  com- 
petition, and  its  true  construction  is  that,  while  unlawful 


66  Manual  of  the  Sherman  Law 

means  to  monopolize  and  to  continue  an  unlawful  monop- 
oly of  interstate  and  international  commerce  are  misde- 
meanors and  enjoinable  under  it,  monopolies  of  part  of 
interstate  and  international  commerce  by  legitimate 
competition,  however  successful,  are  not  denounced  by  the 
law  and  may  not  be  forbidden  by  the  courts."  (Sanborn, 
Circuit  Judge.)  U.  S.  v.  Standard  Oil  Co.,  173  Fed.  177, 
191.    (C.  C— E.  D.  Missouri,  E.  D.  1909.) 

"  Undoubtedly  every  person  engaged  in  interstate  com- 
merce necessarily  attempts  to  draw  to  himself,  to  the 
exclusion  of  others,  and  thereby  to  monopolize,  a  part  of 
that  trade.  Every  sale  and  every  transportation  of  an  ar- 
ticle which  is  the  subject  of  interstate  commerce  evidences 
a  successful  attempt  to  monopolize  that  trade  or  commerce 
which  concerns  that  sale  or  transportation."  If  this  is 
prohibited  by  the  second  section  of  the  act  as  attempting 
to  monopolize,  then  competition  is  forbidden  and  the 
only  purpose  of  the  law  is  defeated.  (Sanborn,  Circuit 
Judge.)  U.  S.  v.  Standard  Oil  Co.,  173  Fed.  177,  191. 
(C.  C— E.  D.  Missouri,  E.  D.  1909.) 

§  136.  Personal  Right  to  Fix  Price  and  Dictate  Terms. 

"The  right  of  each  competitor  to  fix  the  prices  of  the 
commodities  which  he  offers  for  sale  and  to  dictate  the 
terms  upon  which  he  will  dispose  of  them  is  indispensable 
to  the  very  existence  of  competition.  Strike  down  or 
stipulate  away  that  right,  and  competition  is  not  only 
restricted,  but  destroyed."  (Sanborn,  Circuit  Judge.) 
Whitwell  V.  Continental  Tobacco  Co.,  125  Fed.  454,  459. 
(C.  C.  a.  Eighth  Circuit,  1903.) 

§  137.  One  Person  may  make  Exclusive  Sales  of  his  own 
Merchandise. 
Any  person  engaged  in  commerce  among  the  states  may 


Construction  of  Enumerated  Offenses        G7 

lawfully  select  his  customers  and  may  sell  only  to  those 
who  do  not  buy  or  sell  the  wares  of  his  competitors,  such 
a  restriction  of  his  own  trade  by  manufacturer  or  merchant 
not  being  in  restraint  of  trade  or  an  attempt  to  monopolize 
any  part  of  trade  within  meaning  of  the  act.  Whitwell  v. 
Continental  Tobacco  Co.,  125  Fed.  454,  456.  (C.  C.  A. 
Eighth  Circuit,  1903.)  See,  however,  section  3  of  Act  of 
October  15,  1914  (Clayton  Act). 

"An  attempt  by  each  competitor  to  monopolize  a  part 
of  interstate  commerce  is  the  very  root  of  all  competition 
therein.  Eradicate  it,  and  competition  necessarily  ceases — 
dies.  Every  person  engaged  in  interstate  commerce  neces- 
sarily attempts  to  draw  to  himself  and  to  exclude  others 
from  a  part  of  that  trade."  (Sanborn,  Circuit  Judge.) 
Whitwell  V.  Continental  Tobacco  Co.,  125  Fed.  454,  462. 
(C.  C.  A.  Eighth  Circuit,  1903.) 

§  138.  Lawful  Combination  Turned  to  Unlawful  Purposes. 

While  a  corporation  in  its  origin  and  purposes  may  be 
innocent  and  lawful,  yet  "associations  of  men,  like  in- 
dividuals, no  matter  how  worthy  their  general  character 
may  be,  when  charged  with  unlawful  combinations,  and 
when  the  charge  is  fully  established,  cannot  escape  liability 
on  the  ground  of  their  commendable  general  character." 
(Billings,  District  Judge.)  U.  S.  v.  Workingmen's  Amalg. 
Council,  54  Fed.  994,  999.  (C.  C— E.  D.  Louisiana, 
1893.) 

§  139.  Control  of  Rates  and  Prices. 

"The  purpose  of  this  statute  was  to  keep  the  rates  of 
transportation  and  the  prices  of  articles  in  interstate  and 
international  commerce  open  to  free  competition.  Any 
contract  or  combination  of  two  or  more  parties,  whereby 
the  control  of  such  rates  or  prices  is  taken  from  separate 


68  Manual  of  the  Sherman  Law 

competitors  in  that  trade,  and  vested  in  a  person  or  asso- 
ciation of  persons,  necessarily  restricts  competition  and 
restrains  that  commerce."  (Sanborn,  Circuit  Judge.) 
U.  S.  V.  Standard  Oil  Co.,  173  Fed.  177,  184.  (C.  C— 
E.  D.  Missouri,  E.  D.  1909.) 

§  140.  Reasonable  Construction  of  Statute. 

"The  statute  should  be  given  a  reasonable  construction, 
with  a  view  to  reaching  those  undue  restraints  of  inter- 
state trade  which  are  intended  to  be  prohibited  and 
})unished,  and  in  those  cases  (the  Standard  Oil  Co.  & 
Tobacco  Co.  Cases),  it  is  clearly  stated  that  the  decisions 
in  the  former  cases  had  been  made  upon  an  application  of 
that  rule  and  there  was  no  suggestion  that  they  had  not 
been  correctly  decided."  {Mr.  Justice  Day.)  U.  S.  v. 
Union  Pac.  Ry.  Co.,  226  U.  S.  61,  84  (1912). 

"The  act  of  Congress  must  have  a  reasonable  construc- 
tion, or  else  there  would  be  scarcely  an  agreement  or  con- 
tract among  business  men  that  could  not  be  said  to  have 
indirectly  or  remotely  some  bearing  upon  interstate  com- 
merce and  possibl}'^  to  restrain  it.  We  have  no  idea  that 
the  act  covers  or  was  intended  to  cover  such  kinds  of 
agreements."  {Mr.  Justice  Peckham.)  Hopkins  v.  U.  S., 
171  U.  S.  578,  600  (1898) ;  Anderson  v.  U.  S.,  171  U.  S.  604, 
616  (1898);  Whitwell  v.  Continental  Tobacco  Co.,  125  Fed. 
254,  459  (C.  C.  A.  Eighth  Circuit,  1903) ;  U.  S.  v.  Jcnnt 
Traffic  Asso.,  171  U.  S.  505,  568  (1898);  U.  S.  v.  American 
Tobacco  Co.,  221  U.  S.  106,  179  (1911). 

§  141.  Standard  of  Reason  at  Common  Law. 

The  standard  of  reason  ap))lio(l  at  conmion  law  and  in 
the  country  for  determining  the  meaning  of  restraint  of 
trade  is  intended  to  be  the  measure  used  for  the  purpose 
of  determining  whether  or  not  in  a  given  case  the  wrong 


Construction  of  Enumerated  Offenses         09 

complained  of  is  within  the  statute.    Standard  Oil  Co.  v. 
f/.  *S.,  221  U.  S.  1,60,  (1911). 

§  142.   Test  of  Reasonable  Restraint. 

"Where  the  restraint  is  partial,  either  as  to  time  or  place, 
its  validity  is  to  be  determined  by  its  reasonableness  and 
the  existence  of  a  consideration  to  support  it.  The  ques- 
tion of  its  reasonableness  depends  on  the  consideration 
whether  it  is  more  injurious  to  the  public  than  is  required 
to  afford  a  fair  protection  to  the  party  in  whose  favor  it  is 
secured."  (Jackson,  Circuit  Judge.)  In  re  Greene,  52 
Fed.  104,  118.    (C.  C— S.  D.  Ohio,  W.  D.  1892.) 

"We  do  not  see  how  a  better  test  can  be  applied  to  the 
question  whether  this  is  or  is  not  a  reasonable  restraint  of 
trade  than  by  considering  whether  the  restraint  is  such  only 
as  to  afford  a  fair  protection  to  the  interests  of  the  party  in 
favor  of  whom  it  is  given,  and  not  so  large  as  to  interfere  with 
the  interests  of  the  public.  Whatever  restraint  is  larger 
than  the  necessary  protection  of  the  party  requires  can  be 
of  no  benefit  to  either.  It  can  only  be  oppressive.  It  is, 
in  the  eye  of  the  law,  unreasonable.  Whatever  is  in- 
jurious to  the  interests  of  the  public  is  void  on  the  ground 
of  pu])lic  policy."  (Lord  Macnaghton) .  (ItaHcs  mine.) 
Nor  den  felt  v.  Maxiin-Nordenfelt  Co.  (1894),  App.  Cas.  535, 
567;  U.  S.  V.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271,  282. 
(C.  C.  A.  Sixth  Circuit,  1898.) 

"No  conventional  restraint  of  trade  can  be  enforced 
unless  the  covenant  embodying  it  is  merely  ancillary  to 
the  main  purpose  of  a  lawful  contract,  and  necessary  to 
protect  the  covenantee  in  the  enjoyment  of  the  legitimate 
fruits  of  the  contract,  or  to  protect  him  from  the  dangers 
of  an  unjust  use  of  those  fruits  by  the  other  party." 
(Taft,  Circuit  Judge.)  U.  S.  v.  Addyston  Pipe  &  Steel  Co., 
85  Fed.  271,  282.    (C.  C.  A.  Sixth  Circuit,  1898.) 


70  Manual  or  the  Sherman  Law 

§  143.  Materiality  of  Question  of  Reasonable  or  Unreason- 
able Restraint. 

Under  the  recent  decisions  of  the  Supreme  Court  the 
question  as  to  whether  the  restraint  of  trade  imposed  by  a 
combination  is  reasonable  or  unreasonable  is  not  now 
immaterial.  Union  Castle  Mail  S.  S.  Co.  v.  Thomsen,  190 
Fed.  536,  537.    (C.  C.  A.  Second  Circuit,  1911.) 

Although  in  a  number  of  decisions  of  the  federal  courts 
prior  to  the  decisions  in  the  Standard  Oil  Co.  and  Amer- 
ican Tobacco  Co.  Cases,  dicta  may  be  found  to  the  effect 
that  it  is  immaterial  whether  a  restraint  of  trade  is  illegal 
as  being  reasonable  or  unreasonable  in  the  common  law 
sense,  such  dicta  have  now  been  overruled  or  their  efTect 
limited  and  qualified.  Standard  Oil  Co.  v.  U.  S.,  221  U.  S. 
1,  67-68  (1911). 

§  144.  The  Rule  of  Reason. 

The  words  "rule  of  reason"  as  applied  in  the  Standai-d 
Oil  Company  and  American  Tobacco  Company  Cases, 
have  given  rise  to  much  unprofitable  discussion  and 
speculation,  it  appearing  all  the  court  desired  to  convey  by 
this  phrase  was  that  the  standard  of  reason  at  common 
law  was  to  be  emi)loyed  as  a  test,  and  that  in  the  last 
analysis  the  Sherman  Law  like  all  other  statutes  should 
receive  a  reasonable  construction.  Thus,  under  the 
Sherman  Law  the  said  standard  of  r(>ason  is  to  be  invoked 
in  deciding  whether  undue  limitations  have  been  imposed 
upon  interstate  competitive  conditions,  or  whether  ob- 
structions have  been  raised  which  arc  unduly  restrictive 
of  the  flow  of  trade  in  the  channels  of  interst:itc  or  foreign 
commerce.  The  effect  of  the  two  cases  above  mentioned 
is  popularly  supposed  to  have  read  into  the  Sherman  Law 
the  word  unreasonable  as  applied  to  both  restraints  of 
trade  and  monopolies,  but  it  does  not  appear  that  the 


Construction  of  Enumerated  Offenses        71 

Supreme  Court  went  to  this  extreme.  This  is  made  clear 
in  the  American  Tobacco  Company  Case  where  Mr.  Chief 
Justice  White  states,  referring  to  the  Standard  Oil  Com- 
pany Case  (see  221  U.  S.  lOG,  179-180):  "In  other  words, 
it  was  held,  not  that  acts  which  the  statute  prohibited  could 
be  removed  from  the  control  of  its  prohibitions  by  a  finding 
that  they  were  reasonable,  but  that  the  duty  to  interpret 
which  inevitably  arose  from  the  general  character  of  the 
term  restraint  of  trade  required  that  the  words  restraint 
of  trade  should  be  given  a  meaning  which  would  not  de- 
stroy the  individual  right  to  contract  and  render  difficult 
if  not  impossible  any  movement  of  trade  in  the  channels 
of  interstate  commerce — the  free  movement  of  which  it 
was  the  purpose  of  the  statute  to  protect."    (Itahcs  mine.) 

§  145.  Scope  of  First  and  Second  Sections  Taken  Together. 

No  disguise  or  subterfuge  of  form  can  avail.  The  generic 
designation  of  the  first  and  second  sections  of  the  law,  when 
taken  together,  "  embrace  every  conceivable  act  which 
could  possibly  come  within  the  spirit  or  purpose  of  the 
prohibitions  of  the  law,  without  regard  to  the  garb  in 
which  such  acts  are  clothed."  {Mr.  Chief  Justice  White.) 
U.  S.  V.  Amer.  Tobacco  Co.,  221  U.  S.  106,  181. 

§  146.  Subject-Matter  of  First  and  Second  Sections. 

"There  can  be  no  doubt  that  the  sole  subject  with  which 
the  first  section  deals  is  restraint  of  trade  as  therein  con- 
templated, and  that  the  attempt  to  monopolize,  and  monop- 
olization is  the  subject  with  which  the  second  section  is 
concerned."  (Mr.  Chief  Justice  White.)  (Italics  mine.) 
Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  1,  50-51. 

§  147.  The  Two  Sections  not  Identical  in  Scope. 

"Manifestly  this  (second)  section  is  quite  distinct  from 


72  Manual  of  the  Sherman  Law 

the  first,  and  was  not  intended  to  cover  precisely  the  same 
ground.  To  saj^  otherwise  would  be  to  impute  to  Congress 
the  doing  of  the  unnecessary  and  useless."  (Sanborn, 
Circuit  Judge.)  U.  S.  v.  Standard  Oil  Co.,  173  Fed.  177, 
195.    (C.  C— E.  D.  Missouri,  E.  D.  1909.) 

§  148.  Second  Section  Broader  than  First. 

"Though  the  natural  tendency  of  a  combination  in  re- 
straint of  trade  declared  illegal  by  section  1  may  be  and 
generally  is  towards  monopoly  denounced  by  section  2, 
and  may  even  accomplish  it,  yet  the  scope  of  the  latter 
section  is  far  broader  and  was  designed  to  extend  also  to 
monopolies  secured  by  other  means  than  by  contracts, 
combinations  and  conspiracies  in  restraint  of  trade,  which, 
as  those  terms  necessarily  imply,  require  concert  between 
two  or  more  persons  or  corporations."  (Sanborn,  Circuit 
Judge.)  U.  S.  v.  Standard  Oil  Co.,  173  Fed.  177,  195. 
(C.  C— E.  D.  Missouri,  E.  D.  1909.) 

§  149.  Second  Section  Supplementary  to  the  First. 

The  text  of  tlie  second  section  is  intended  to  supplement 
the  first  and  to  make  sure  that  by  no  possible  guise  could 
the  pu})lic  policy  embodied  in  the  first  section  be  frustratini 
or  evaded.  Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  1,  00  (1911). 

There  has  been  a  practical  evolution  by  which  monopoly 
and  acts  which  produce  the  same  results  as  m()noi:)oly, 
that  is,  an  undue  restraint  of  the  course  of  trade,  have 
come  to  be  spoken  of  as,  and  to  be  indeed  synonymous 
with  restraint  of  trade.  That  is,  having  ])y  the  first  sec- 
tion forbidden  all  means  of  monoi)olizing  trade  by  unduly 
restraining  it  by  certain  enumerated  offenses,  the  second 
section  seeks,  if  possible,  to  make  the  ])rohibitions  of  the 
act  all  the  more  complete  and  perfect  by  embracing  all 
attempts  to  reach  the  end  prohibited  by  the  first  section, 


Construction  of  Enumerated  Offenses        73 

that  is,  restraints  of  trado,  by  any  attempt  to  monopolize 
or  monopolization  thereof,  eve7i  though  the  acts  producing 
or  tending  to  -produce  such  results  are  not  embraced  within 
the  general  enumeration  of  the  first  section.  Standard  Oil 
Co.  V.  U.  S.,  221  U.  S.  1,  61  (1911). 

§  150.  Second  Section  Includes  more  than  Restraints  of 
Trade  at  Common  Law. 
A  careful  readmg  of  the  Standard  Oil  Co.  and  American 
Tobacco  Co.  Cases  would  appear  to  indicate  that  if  the 
words  "restraint  of  trade"  are  to  be  given  their  common 
or  general  law  meaning,  that  is  are  to  be  limited  to  the 
specification  of  offenses  set  forth  in  section  one,  and  if 
section  two  is  broader  than  the  first  and  seeks  to  reach 
matters  m  substantial  obstruction  of  the  channels  of  trade 
not  forbidden  by  the  first  section,  that  section  two  in 
theory  at  least  must  necessarily  be  extended  to  include 
matters  that  are  not  at  all  in  restraint  of  trade  in  the  com- 
mon or  general  law  sense.  Accordingly  in  the  Standard 
Oil  Company  and  Tobacco  Company  Cases,  Chief  Justice 
White  appears  to  use  the  words  restraint  of  trade  in  a 
double  sense,  first,  as  indicating  solely  restraints  of  trade 
in  the  light  of  the  existing  practical  conception  of  the 
general  or  common  law,  and  as  set  forth  in  section  one, 
second,  as  indicating  undue  restraints  which  were  not  in- 
cluded within  the  prohibitions  of  section  one,  that  is, 
which  were  not  restraints  of  trade  in  the  common  or  gen- 
eral law  sense,  but  which  nevertheless  brought  about  an 
undue  obstruction  to  interstate  or  foreign  trade  and  com- 
merce. 


CHAPTER  VII 

JUDICIAL    INTERPRETATION     OF     "RESTRAINT    OF    TRADE" 
UNDER   THE    ACT 

§  151.  Meaning  of  "  Restraint  of  Trade." 

The  precise  meaning  of  the  worcis  "restraint  of  trade" 
as  used  in  the  act  is  difficult  of  exact  statement.  It  un- 
doubtedly includes  all  undue  restraints  held  to  be  illegal 
or  unenforceable  at  common  law  or  the  general  law  of  this 
country  at  the  time  of  the  enactment  of  the  statute  and 
coming  within  the  enumerated  offenses  of  the  first  section. 
It  includes  by  reason  of  the  all  embracing  character  of  said 
enumeration  any  contract  or  combination  method  "  whether 
old  or  new"  constituting  an  midue  restraint,  in  order  that 
no  form  of  contract  or  combination  could  be  resorted  to 
to  save  such  restraint  from  condemnation.  It  would,  how- 
ever, appear  that  all  undue  restraints,  if  any,  outside  of 
said  enumerated  offenses,  and  not  therefore  "restraints  of 
trade  or  commerce"  in  their  well  recognized  legal  meaning, 
were  not  included  in  the  first  section  but  were  included  in 
the  second  section,  such  section  reaching  every  act  bringing 
about  the  prohibited  results.  See  Standard  Oil  Co.  v. 
U.  S.,  221  U.  S.  1,  59,  62  (1911). 

§  152.  Breadth  of  Meaning  Given  to  Words  "  Restraint  of 
Trade." 

"  The  words  restraint  of  trade  should  be;  given  a  meaning 
which  would  not  destroy  the  individual  right  of  contract, 
and  render  difficult,  if  not  impossible,  any  movement  of 

74 


"Restraint  of  Trade"  Interpreted  75 

trade  in  the  character  of  interstate  commerce,  the  free 
movement  of  which  it  was  the  purpose  of  the  statute  to 
protect."  {Mr.  Chief  Justice  V^hytf..)  U.  S.  y.  American 
Tobacco  Co.,  221  U.  S.  106,  180  (1911);  U.  S.  v.  Reading 
Co.,  226  U.  S.  324,  369  (1912). 

§  153.  Construction  Controlled  by  Title  of  Act. 

"Construed  Uterally,  tlie  terms  used  in  the  body  of  this 
act  forbid  all  contracts  or  combinations  in  restraint  of 
trade  or  commerce ;  "but  that  construction  is  controlled  by 
the  title,  which  shows  that  only  unlawful  restraints  were 
intended."  (Woods,  Circuit  Judge.)  U.  S.  v.  Dehs,  64 
Fed.  724,  747.    (C.  C— N.  D.  Ilhnois,  1894,.) 

§  154.  No  Affirmative  Relief  at  Common  Law. 

While  at  common  law  contracts  and  combinations  in 
restraint  of  trade  were  only  illegal  in  the  sense  of  being 
unenforceable,  and  while  private  wrongs  could  not  be 
i:)redicated  thereon  unless  indictable,  it  does  not  follow 
that  legislative  authority  may  not  create  a  right  of  private 
action  in  one  who  has  thereby  suffered  injuries  in  business 
or  property.  Wheeler-Stenzel  Co.  v.  NaVl  Window  Glass 
Assn.,  152  Fed.  864,  873.     (C.  C.  A.  Third  Circuit,  1907.) 

"Contracts  that  were  in  unreasonable  restraint  of  trade 
at  common  law  were  not  unlawful  in  the  sense  of  being 
criminal,  or  giving  rise  to  a  civil  action  for  damages  in 
favor  of  one  prejudicially  affected  thereby,  but  were  simply 
void,  and  were  not  enforced  by  the  courts.  Mogul  Steam- 
ship Co.  V.  McGregor,  Gow  &  Co.  (1892),  App.  Cas.  25; 
Hornby  v.  Close,  L.  R.  2  Q.  B.  153;  Lord  Campbell,  C.  J., 
in  Hilton  v.  Eckersley,  6  El.  &  Bl.  47,  66;  Hannon,  J.,  in 
Farrer  v.  Close,  L.  R.  4  Q.  B.  602,  612.  The  effect  of  the 
act  of  1890  is  to  render  such  contracts  unlawful  in  an 
affirmative  or  positive  sense,  and  punishal)le  as  a  misde- 


70  Manual  of  the  Sherman  Law 

meanor,  and  to  create  a  right  of  civil  action  for  damages 
in  favor  of  those  injured  thereby,  and  a  civil  remedy  by 
injunction  in  favor  of  both  private  persons  and  the  public 
against  the  execution  of  such  contracts  and  the  main- 
tenance of  such  trade  restraints."  (Taft,  Circuit  Judge.) 
U.  S.  V.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271,  279.  (C. 
C.  A.  Sixth  Circuit,  1898.) 

"The  act  of  July  2,  1890,  on  which  the  present  indict- 
ment is  based,  in  declaring  that  contracts,  combinations, 
and  conspiracies  in  restraint  of  trade  and  commerce  be- 
tween the  states  and  foreign  countries  were  not  only  il- 
legal, but  should  constitute  criminal  offenses  against  the 
United  States,  goes  a  step  beyond  the  common  law,  in  this: 
that  contracts  in  restraint  of  trade,  while  unlawful,  were 
not  misdemeanors  or  indictable  at  common  law.  It  adopts 
the  common  law  in  making  combinations  and  conspiracies 
in  restraint  of  the  designated  trade  and  commerce  criminal 
offenses,  and  creates  a  new  crime,  in  making  contracts  in 
restraint  of  trade  misdemeanors,  and  indictable  as  such. 
But  the  act  does  not  undertake  to  define  what  constitutes 
a  contract,  combination,  or  conspiracy  in  restraint  of 
trade,  and  recourse  must  therefore  be  had  to  the  common 
law  for  the  proper  definition  of  these  gen(U'al  terms,  and  to 
ascertain  whether  the  acts  charged  come  within  the  stat- 
ute." (Jackson,  Circuit  Judge.)  (Italics  mine.)  In  re 
Greene,  52  Fed.  104,  111.  (C.  C— S.  D.  Ohio,  W.  D. 
1892.) 

§  155.  "  Restraint  of  Trade  "  to  be  Given  Common  Law 
Meaning, 
"The  context  manifests  that  the  statute  was  drawn  in 
the  light  of  the  existing  i^ractical  conception  of  the  law  of 
restraint  of  trade,  because  it  groups  as  within  that  class, 
not  only  contracts  which  were  in  restraint  of  trade  in  the 


"Restraint  of  Trade"  Interpreted  77 

subjective  sense,  but  all  contracts  or  acts  which  theoreti- 
cally were  attempts  to  monopolize,  yet  which  in  practice 
had  come  to  be  considered  as  in  restraint  of  trade  in  a  broad 
sense."  (Mr.  Chief  Justice  White.)  Standard  Oil  Co.  v. 
U.  S.,  221  U.  S.  1,  59  (1911);  U.  S.  v.  Patten,  226  U.  S.  525, 
542  (1912). 

"Where  the  words  are  employed  in  a  statute  which  had 
at  the  time  a  well-kno^vn  meaning  at  common  law  or  in 
the  law  of  this  countr}^  they  are  presumed  to  have  been 
used  in  that  sense  unless  the  context  compels  to  the  con- 
trary." (Mr.  Chief  Justice  White.)  Standard  Oil  Co.  v. 
U.  S.,  221  U.  S.  1,  59  (1911). 

"When  Congress,  under  and  in  the  exercise  of  powers 
conferred  by  the  constitution,  adopts  or  creates  common- 
law  offenses,  the  courts  may  properly  look  to  that  body  of 
jurisprudence  for  the  true  meaning  and  definition  of  such 
crimes,  if  they  are  not  clearly  defined  in  the  act  creating 
them."  (Jackson,  Circuit  Judge.)  In  re  Greene,  52  Fed. 
104,  111.    (C.  C— S.  D.  Ohio,  W.  D.  1892.) 

"The  'restraint  of  trade'  which  is  obnoxious  to  the  pro- 
visions of  the  first  section  must  be  of  such  kind  as  was, 
before  the  passage  of  the  act,  recognized  as  unlawful." 
(Lacombe,  Circuit  Judge.)  Dueber  Watch  Case  Mfg.  Co. 
V.  Hoivard  Watch  Co.,  66  Fed.  637,  643.  (C.  C.  A.  Second 
Circuit,  1895.) 

"The  phrase  used  in  the  act  of  1890,  viz.  'restraint  of 
trade,'  is  no  new  one.  It  had  theretofore  been  used  by 
courts  applying  the  doctrines  of  the  common  law  in  de- 
termining the  validity  of  contracts.  It  is  to  be  presumed 
that  the  law-makers,  when  they  chose  this  phrase,  intended 
that  it  should  have,  when  used  in  the  statute,  no  other  or 
different  meaning  from  that  which  had  always  been  given 
to  it  in  judicial  decisions  and  in  the  common  understand- 
ing.    The  title  indicates  that  the  phrase  is  so  used,  for 


78  Manual  of  the  Sherman  Law 

the  act  is  described  as  one  '  to  protect  trade  and  commerce 
against  unlawful  restraints  and  monopolies';  and,  though 
the  title  to  an  act  camiot  control  its  words,  it  may  furnish 
some  aid  in  showing  what  was  in  the  mind  of  the  legis- 
lator." (Lacombe,  Circuit  Judge.)  Dueber  Watch  Case 
Mfg.  Co.  V.  Howard  Watch  Co.,  66  Fed.  637,  643.  (C.  C.  A. 
Second  Circuit,  1895.) 

§  156.  Statutes  Changing  Common  Law  Rules. 

"  Statutes  are  not  to  be  interpreted  to  change  the  com- 
mon law,  except  so  far  as  a  purpose  so  to  do  is  necessarily 
implied."  (Putnam,  Circuit  Judge.)  U.  S.  v.  Winslow, 
195  Fed.  579,  587.    (D.  C.  Mass.  1912.) 

§  157.  Conspiracy  in  Restraint  of  Trade  not  Limited  to  Con- 
tracts and  Combinations  Illegal  at  Common  Law. 

"Under  the  familiar  rule  that  such  federal  enactments 
will  be  interpreted  by  the  light  of  the  common  law,  I  have 
no  doubt  but  that  this  statute,  in  so  far  as  it  is  directed 
against  contracts  or  combinations  in  the  form  of  trusts, 
or  in  any  form  of  a  'contractual  character,'  should  be 
limited  to  contracts  and  combinations  such,  in  their  gen- 
eral characteristics,  as  the  courts  have  declared  unlawful. 
But  to  put  such  limitation  upon  the  word  'conspiracy'  is 
neither  necessary,  nor,  as  I  think,  permissible."  (Woods, 
Circuit  Judge.)  U.  S.  v.  Dehs,  64  Fed.  724,  747-748.  (C. 
C— N.  D.  Illinois,  1894.) 

§  158.  Scope  of  "  Restraint  of  Trade  "  Under  the  Act. 

"Applying  th(;  rule  of  reason  to  the  construction  of  the 
statute,  it  was  held  in  the  Standard  Oil  Case  that  as  the 
words  'restraint  of  trade'  at  common  law  and  in  the  law 
of  this  country  at  the  time  of  the  adoption  of  the  anti-trust 
act  only  embraced  acts  or  contracts  or  agreements  or  com- 


"Restraint  of  Trade"  Interpreted  79 

binations  which  opc^rated  to  the  prejudice  of  the  public 
interests  by  unrhdy  restricting  competition  or  unduly  ob- 
structing the  due  course  of  trade  or  which,  either  because 
of  their  inherent  nature  or  effect  or  because  of  the  evident 
purpose  of  the  acts,  etc.,  injuriously  restrained  trade,  that 
the  words  as  used  in  the  statute  were  designed  to  have  and 
did  have  but  a  Hke  significance."  {Mr.  Chief  Justice 
White.)  (ItaHcs  mine.)  U.  S.  v.  Am.  Tobacco  Co.,  221 
U.  S.  106,  179  (1911).  Quoted  with  approval  by  Mr. 
Justice  Day  in  U.  S.  v.  Union  Pac.  Ry.  Co.,  226  U.  S.  61, 
84  (1912). 

The  all  embracing  enumeration  of  the  first  section  was 
"to  make  sure  that  no  form  of  contract  or  combination 
by  which  an  undue  restraint  of  interstate  or  foreign  com- 
merce was  brought  about  could  save  such  restraint  from 
condemnation."  {Mr.  Chief  Justice  White.)  (Italics 
mine.)  Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  1,  59-60 
(1911). 

§  159.  Actual  Restraint  not  Prohibited. 

"It  is  not  the  actual  restraint  of  trade  (if  such  be  re- 
straint of  trade)  that  is  made  illegal  by  the  statute,  but 
the  making  of  a  contract  in  restraint  of  trade,  of  a  contract 
which  restrains  or  is  intended  to  restrain  trade."  (La- 
combe,  Circuit  Judge.)  hi  re  Terrell,  51  Fed.  213,  215. 
(C.  C— S.  D.  New  York,  1892.) 

§  160.  General  Restraint  of  Trade. 

"It  is  well  settled  that  contracts  in  general  restraint  of 
trade  are  contrary  to  public  policy,  and  therefore  unlaw- 
ful." (Jackson,  Circuit  Judge.)  In  re  Greeiie,  52  Fed.  104, 
118.    (C.  C— S.  D.  Ohio,  W.  D.  1892.) 

§  161.  Voluntary  and  Involuntary  Restraints. 

Section  one  "is  not  confined  to  voluntary  restraints,  as 


80  Manual  of  the  Sherman  Law 

where  persons  engaged  in  interstate  trade  or  commerce 
agree  to  suppress  competition  among  themselves,  but  in- 
cludes as  well  involuntary  restraints,  as  .where  persons 
not  so  engaged  conspire  to  compel  action  by  others,  or  to 
create  artificial  conditions,  Avhich  necessarily  impede  or 
burden  the  due  course  of  such  trade  or  restrict  the  common 
liberty  to  engage  therein."  (Mr.  Justice  Van  Devanter.) 
U.  S.  V.  Patten,  226  U.  S.  525,  541  (1912). 

§  162.  All  Forms  of  Combination  in  Restraint  of  Trade  are 
Embraced. 

"The  statute  in  its  terms  embraces  every  contract  or 
combination,  in  form  of  trust  or  otherwise,  or  conspiracy 
in  restraint  of  trade  or  commerce.  The  Supreme  Court 
has  repeatedly  held  this  general  phraseology  embraces 
all  forms  of  combination,  old  and  new."  (Mr.  Justice 
Day.)  U.  S.  v.  Union  Pac.  Ry.  Co.,  226  U.  S.  61,  85-86 
(1912). 

"While  the  statute  prohibits  all  combinations  in  the 
form  of  trusts  or  otherwise,  the  limitation  is  not  confined 
to  that  form  alone.  All  combinations  which  are  in  re- 
straint of  trade  or  commerce  are  prohibited,  whether  in 
the  form  of  trusts  or  in  any  other  form  whatever."  (Mr. 
Justice  Peckham.)  U.  S.  v.  Freight  Assn.,  166  U.  S.  290, 
326  (1897). 

§  163.  Reasonable  Construction  Excludes  Normal  and  Usual 
Contracts,  Incidental  to  Lawful  Purposes. 

"Giving  the  statute  a  reasonable  construc^tion  the  words 
*  restraint  of  trade'  did  not  embra(;e  all  those  normal  and 
usual  contracts  essential  to  individual  freedom  and  the 
right  to  make  which  were  necessary  in  order  that  the  course 
of  trade  might  be  free."  (Mr.  Chief  Justice  White.) 
U.  S.  v.  American  Tobacco  Co.,  221  U.  "s.  106,  181  (1911). 


"Restraint  of  Trade"  Interpreted  81 

"The  statute  did  not  forbid  or  restrain  the  power  to 
make  normal  and  usual  contracts  to  further  trade  by  re- 
sorting to  all  normal  methods,  whether  by  agreement  or 
otherwise,  to  accomplish  such  purpose."  {Mr.  Chief  Jus- 
tice White.)  U.  S.  v.  Am.  Tobacco  Co.,  221  U.  S.  106,  179 
(1911);  U.  S.  V.  Union  Pac.  Ry.  Co.,  226  U.  S.  61,  84-85 
(1912);  U.  S.  V.  Reading  Co.,  226  U.  S.  324,  369  (1912). 

The  act  broadly  condemns  all  combinations  and  con- 
spiracies which  unduly  restrain  the  free  and  natural  flow 
of  trade  in  the  channels  of  interstate  commerce,  it  not 
being  intended  to  reach  normal  and  usual  contracts  in- 
cident to  lawful  purposes  and  intended  to  further  legiti- 
mate trade.  Eastern  States  Retail  Lumber  Dealers'  Asso. 
V.  U.  S.,  234  U.  S.  600,  609-610  (1913). 

§  164.  Test  Whether  Unusual  or  Wrongful. 

The  test  to  be  applied  is  whether  or  not  the  facts  of  any 
case  brought  under  the  act  "established  that  the  acts, 
contracts,  agreements,  combinations,  etc.,  which  were  as- 
sailed Avere  of  such  an  unusual  and  wrongful  character 
as  to  bring  them  within  the  prohibitions  of  the  law."  (Mr. 
Chief  Justice  White.)  (Italics  mine.)  U.  S.  v.  American 
Tobacco  Co.,  221  U.  S.  106,  181  (1911). 

§  165,  Where  Sole  Purpose  is  Destruction  of  Competition. 

"Agreements  or  combinations  between  dealers,  having 
for  their  sole  purpose  the  destruction  of  competition  and 
the  fixing  of  prices,  are  injurious  to  the  public  interest  and 
void."  {Mr.  Justice  Hughes.)  Dr.  Miles  Medical  Co.  v. 
John  D.  Park  &  Sons  Co.,  220  U.  S.  373,  408  (1911). 

§  166.  Combination  Formed  Abroad. 

A  combination  formed  for  the  purpose  of  monopolizing 
or  restraining  the  foreign  commerce  of  the  United  States 


82  Manual  of  the  Sherman  Law 

is  not  rendered  immune  to  the  operation  of  the  Act  be- 
cause such  combination  was  entered  into  on  foreign  soil. 
U.  S.  V.  Hamburg- Amer.,  etc.,  Gesellshaft,  200  Fed.  806, 
807-808.  (C.  C— S.  D.  New  York,  1911);  Thomseji  v. 
Uyiion  Castle  Mail  S.  S.  Co.,  166  Fed.  251,  253.  (C.  C.  A. 
Second  Circuit,  1908.) 

§  167.  Direct  or  Indirect  Effect. 

It  has  been  laid  down  in  a  series  of  decisions  of  the  Su- 
preme Court  and  followed  in  other  courts,  that  the 
criterion  to  be  employed  in  construing  the  Sherman  Law 
is  the  direct  or  indirect  effect  upon  interstate  commerce 
of  the  acts  involved;  and  such  test  is  in  no  way  departed 
from  in  the  Standard  Oil  Company  Case  and  is  expressly 
held  to  be  in  complete  accord  with  the  rule  of  reason,  said 
test  and  said  rule  in  their  ultimate  aspect  coming  to  one 
and  the  same  thing.  Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  1, 
66  (1911). 

§  168.  Direct  and  Immediate  Effect. 

"The  statute  applies  only  to  those  contracts  whose 
direct  and  immediate  effect  is  a  restraint  upon  interstate 
coromerce,  and  that  to  treat  the  act  as  condemning  all 
agreements  under  which,  as  a  result,  the  cost  of  conduct- 
ing an  interstate  commercial  business  may  be  increased, 
would  enlarge  the  application  of  the  act  far  beyond  the 
fair  meaning  of  the  language  used."  (Mr.  Justice  Peck- 
ham.)  U.  S.  V.  Joint  Traffic  Association,  171  U.  S.  505, 
568  (1898). 

"  To  treat  as  condemned  by  the  act  all  agreements  under 
which,  as  a  result,  the  cost  of  conducting  an  interstate 
commercial  ])usiness  may  be  increased  would  enlarge  the 
application  of  the  act  far  beyond  the  fair  meaning  of  the 
language  used.    There  must  be  some  direct  and  immediate 


"Restraint  of  Trade"  Interpreted  83 

effect  upon  interstate  commerce  in  order  to  come  within 
the  act."  (Mr.  Justice  Peckham.)  Hopkins  v.  U.  S., 
171  U.  S.  578,  592  (1898). 

"  An  agreement  may  in  a  variety  of  ways  affect  interstate 
commerce,  just  as  state  legislation  may,  and  yet,  like  it,  be 
entirety  valid,  because  the  interference  produced  by  the 
agreement  or  by  the  legislation  is  not  direct."  (Mr.  Jus- 
tice Peckham.)  Hopkins  v.  U.  S.,  171  U.  S.  578,  594 
(1898). 

"Any  agreement  or  combination,  which  directly  op- 
erates, not  alone  upon  the  manufacture,  but  upon  the 
sale,  transportation,  and  delivery  of  an  article  of  interstate 
commerce,  by  preventing  or  restricting  its  sale,  etc., 
thereby  regulates  interstate  commerce  to  that  extent  and 
to  the  same  extent  trenches  upon  the  power  of  the  na- 
tional legislature  and  violates  the  statute."  (Mr.  Justice 
Peckham.)  Addyston  Pipe  &  Steel  Co.  v.  U.  »S.,  175 
U.  S.  211,  242  (1899). 

The  language  of  the  first  section  "is  to  be  construed  as 
prohibiting  any  contract  or  combination  whose  direct 
effect  is  to  prevent  the  free  play  of  competition,  and  thus 
tend  to  deprive  the  country  of  any  number  of  independent 
dealers  however  small."  (Lacombe,  Circuit  Judge.)  U.  S. 
V.  Am.  Tobacco  Co.,  164  Fed.  700,  701.  (C.  C— S.  D.  New 
York,  1908.) 

§  169.  Incidental  or  Indirect  Effect. 

If  an  alleged  combination  "promotes,  or  but  incidentally 
or  indirectly  restricts  competition  while  its  main  purpose 
and  chief  effect  are  to  foster  the  trade  and  to  increase  the 
business  of  those  who  make  and  operate  it,  then  it  is  not  a 
contract,  combination  or  conspiracy  in  restraint  of  trade, 
within  the  true  interpretation  of  this  act,  and  it  is  not 
subject  to  its  denunciation."     (Sanborn,  Circuit  Judge.) 


84  Manual  of  the  Sherman  Law 

Whitwell  V.  Continental  Tobacco  Co.,  125  Fed.  454,  458. 
(C.  C.  A.  Eighth  Circuit,  1903). 

''An  agreement  entered  into  for  the  purpose  of  promot- 
ing the  legitimate  business  of  an  individual  or  corporation, 
with  no  purpose  to  thereby  affect  or  restrain  interstate 
commerce,  and  which  does  not  directly  restrain  such  com- 
merce, is  not,  as  we  think,  covered  by  the  act,  although 
the  agreement  maj'"  indirectly  and  remotely  affect  that 
commerce."  {Mr.  Justice  Peckham.)  United  States  v. 
Joint  Traffic  Association,  171  U.  S.  505,  568  (1908). 

"Where  the  suljject-mattcr  of  the  agreement  does  not 
directly  relate  to  and  act  upon  and  embrace  interstate 
commerce,  and  where  the  undisputed  facts  clearly  show 
that  the  purpose  of  the  agreement  was  not  to  regulate, 
obstruct,  or  restrain  that  commerce,  but  that  it  was  en- 
tered into  with  the  object  of  properly  and  fairly  regulating 
the  transaction  of  the  business  in  which  the  parties  to  the 
agreement  were  engaged,  such  agreement  will  be  upheld  as 
not  within  the  statute,  where  it  can  be  seen  that  the  char- 
acter and  terms  of  the  agreement  are  well  calculated  to  at- 
tain the  purpose  for  which  it  was  formed,  and  where  the  ef- 
fect of  its  formation  and  enforcement  upon  interstate  trade 
or  commerce  is  in  any  event  but  indirect  and  incidental, 
and  not  its  purpose  or  object."  {Mr.  Justice  Peckham.) 
Anderson  v.  United  States,  171  U.  S.  604,  615  (1898). 

"The  Act  of  Congress  must  have  a  reasona])le  construc- 
tion, or  else  there  would  scarcely  be  an  agreement  or  con- 
tract among  business  men  that  could  be  said  to  have  di- 
rectly or  remotc^ly  some  bearing  on  interstate  commerce, 
and  possibly  to  restrain  it.  {Mr.  Justice  Peckham.) 
Hopkins  v.  U.  S.,  171  U.  S.  578,  600  (1898);  U.  S.  v. 
Joint  Traffic  Association,  171  U.  S.  505,  5()8  (1898);  U.  S. 
V.  AmericaH  Tobacco  Co.,  221  U.  S.  106,  179  (1911). 

"  ^i'he  act  of  July  2,  1890,  does  not  denounce  every  com- 


"  Restraint  of  Trade  "  Interpreted  85 

bination  in  or  to  conduct  commerce  among  the  states  or 
with  foreign  nations  but  those  comloinations  alone  which 
restrain  that  commerce.  It  does  not  denounce  every  com- 
bination, which  restrains  that  commerce,  but  those  com- 
binations only,  the  necessary  effect  of  which  is  to  stifle,  or 
directly  and  sul)stantially  to  restrict,  free  competition  in 
that  commerce."  (Sanborn,  Circuit  Judge.)  Union 
Pacific  Coal  Co.  v.  U.  S.,  173  Fed.  737,  739.  (C.  C.  A. 
Eighth  Circuit,  1909.) 

"The  contract  which  incidentally,  collaterally  or  re- 
motely affects  interstate  commerce,  although  indirectly 
in  furtherance  of  and  advantageous  to  interstate  com- 
merce, is  not  within  the  scope  of  the  act.  It  must  appear 
that  the  effect  of  such  a  contract  is  direct  and  substantial." 
(lluGG,  Chief  Justice.)  United  Shoe  Machinery  Co.  v. 
LaChapelle,  212  Mass.  467,  484  (Mass.  Supreme  Court, 
1912). 

§  170.  Necessary  Construction  of  Contract. 

"A  contract  is  not  to  be  assumed  to  contemplate  un- 
lawful results  unless  a  fair  construction  requires  it  upon 
the  established  facts."  (Mr.  Justice  Holmes.)  Cincinnati 
Packet  Co.  v.  Boy,  200  U.  S.  179,  184  (1906). 

§  171.  Necessary  Operation  or  Effect. 

"In  all  the  prior  cases  in  this  court  the  Anti-Trust  Act 
has  been  construed  as  forbidding  any  combination  which 
by  its  necessary  operation  destroys  or  restricts  free  com- 
petition among  those  engaged  in  interstate  commerce;  in 
other  words,  that  to  destroy  or  restrict  free  competition  in 
interstate  commerce  was  to  restrain  such  commerce." 
(Mr.  Justice  Harlan.)  Northern  Securities  Co.  v.  U.  S., 
193  U.  S.  197,  337  (1904);  U.  S.  v.  Union  Pac.  Ry.  Co., 
226  U.  S.  61,  82-8S  (1912). 


8G  Manual  of  the  Sherman  Law 

"Although  the  act  of  Congress  known  as  the  Anti- 
Trust  Act  has  no  reference  to  the  mere  manufacture  or 
production  of  articles  or  commodities  within  the  limits  of 
the  several  States,  it  does  embrace  and  declare  to  be  illegal 
every  contract,  combination  or  conspiracy,  in  whatever 
form,  of  whatever  nature,  and  whoever  may  be  parties 
to  it,  which  directly  or  necessarily  operates  in  restraint  of 
trade  or  commerce  among  the  several  States  or  urith  foreign 
7iations."  {Mr.  Justice  Harlan.)  No.  Securities  Co.  v. 
U.  S.,  193  U.  S.  197,  331  (1904) ;  Loewe  v.  Lawlor,  208  U.  S. 
274,  297  (1908);  Ware-Kramer  Tobacco  Co.  v.  Ainer.  To- 
bacco Co.,  178  Fed.  117,  124  (C.  C— E.  D.  North  Caro- 
lina, 1910);  U.  S.  V.  Great  Lakes  Touring  Co.,  208  Fed. 
733,  741.    (D.  C— N.  D.  Ohio,  E.  D.  1913.) 

"The  test  of  the  legality  of  a  contract  or  combination 
under  this  act  is  its  direct  and  necessary  effect  upon  com- 
petition in  interstate  or  international  commerce.  If  the 
necessary  effect  of  a  contract,  combination,  or  cons])iracy 
is  to  stifle,  or  directly  and  substantially  to  restrict,  free 
competition  in  commerce  among  the  states  or  with  foreign 
nations,  it  is  a  contract,  coml^ination  or  cons]iiracy  in  re- 
straint of  that  trade,  and  it  violates  the  law."  (San horn, 
Circuit  Judge.  U.  S.  v.  Standard  Oil  Co.,  173  Fed.  177, 
179,  see  also  page  188.  (C.  C— E.  D.  Missouri,  E.  D. 
1909.) 

"  If  the  necessary  effect  of  a  combination  to  engage  in 
or  conduct  interstate  or  international  commerce  is  but 
incidentally  and  indirectly  to  restrict  competition  therein, 
while  the  chief  result  is  to  foster  the  trade  and  to  increase 
the  business  of  thos(>  who  make  and  operate  it,  it  does  not 
fall  under  the  ban  of  this  law."  (Sanborn,  Circuit  Judge.) 
Union  Pacific  Coal  Co.  v.  U.  S.,  173  Fed.  737,  740.  (C.  C. 
A.  Eighth  Circuit,  1909.) 

"It  is  settled  that  a  combination  does  not  violate  the 


"Restraint  of  Trade"  Interpreted  87 

federal  statute  merely  because  it  may  indirectly,  inci- 
dentally, or  remotely  restrain  trade  or  tend  toward 
monopoly.  If  its  necessary  effect  is  to  stifle  or  to  directly 
or  substantially  restrict  interstate  commerce,  it  falls  under 
the  ban  of  the  law.  On  the  other  hand,  if  it  only  in- 
cidentally or  indirectly  restricts  competition  while  its 
main  purpose  and  chief  effect  are  to  promote  the  business 
and  increase  the  trade  of  consumers,  it  is  not  denounced 
or  voided  by  that  law."  (Knappen,  District  Judge.) 
Bigelow  v.  Calumet  &  Hecla  Mining  Co.,  167  Fed.  704,  712. 
(C.  C— W.  D.  Michigan,  N.  D.  1908),  citing  numerous 
cases. 


CHAPTER  VIII 

CONTRACTS   IN    RESTRAINT   OF   TRADE 

§  172.  Restraints  on  General  Right  of  Alienation. 

"The  right  of  ahenation  is  one  of  the  essential  incidents 
of  a  right  of  general  property  in  movables,  and  restraints 
upon  alienation  have  been  generally  regarded  as  obnoxious 
to  pul)lic  policy,  which  is  best  served  by  great  freedom  of 
traffic  in  such  things  as  pass  from  hand  to  hand."  (Lur- 
TON,  Circuit  Judge.)  John  D.  Park  &  Sons  Co.  v.  Hart- 
man,  153  Fed.  24,  39.    (C.  C.  A.  Sixth  Circuit,  1907.) 

§  173.  General  Right  to  Fix  Terms  of  Sale. 

Every  person  "engaged  in  the  production  of  an  article 
may,  of  course  fix  the  terms  upon  which  he  will  sell,  pro- 
vided he  violates  no  law  in  so  doing" ;  ..."  but  when  all, 
or  substantially  all,  producers  and  dealers  combine  to  fix 
prices  and  control  sales  as  well  as  production,  the  interests 
of  the  public  are  at  once  threatened,  and  necessarily 
injured."  (Ray,  District  Judge.)  O'Holloran  v.  American 
Sea  Green  Slate  Co.,  207  Fed.  187,  190,  191.  (D.  C— N. 
D.  New  York,  1913.) 

§  174.  Preventing  Play  of  Natural  Competition. 

"The  natural,  direct  and  immediate  effect  of  competi- 
tion is,  however,  to  lower  rates,  and  to  thereby  increase 
the  demand  for  commodities,  the  supplying  of  which  in- 
creases commerce,  and  an  agreement,  whose  first  and 
(.lirect  effect  is  to  prevent  this  play  of  competition,  re- 

88 


Contracts  in  Restraint  of  Trade  80 

strains  instead  of  promoting  trade  and  commerce."  (Mr. 
Justice  Peckham.)  U.  S.  v.  Joiyit  Traffic  Association, 
171  U.  S.  505,  577  (1898). 

§  175.  Where  Restraint  is  Insignificant. 

Even  if  a  contract  does  not  leave  commerce  among  the 
states  untouched,  this  is  immaterial  where  the  "inter- 
ference with  such  commerce  is  insignificant  and  incidental 
and  not  the  dominant  purpose  of  the  contract."  (Mr. 
Justice  Holmes.)  Cincinnati  Packet  Co.  v.  Bay,  200  U.  S. 
179,  184  (1906). 

§  176.  Conventional  Restraint  of  Trade  must  be  Ancillary. 

"No  conventional  restraint  of  trade  can  be  enforced 
unless  the  covenant  embodying  it  is  merely  ancillary  to 
the  main  purpose  of  a  lawful  contract  and  necessary  to 
protect  the  covenantee  in  the  enjoyment  of  the  legitimate 
fruits  of  the  contract,  or  to  protect  him  from  the  dangers 
of  an  unjust  use  of  those  fruits  by  the  other  party." 
(Taft,  Circuit  Judge.)  U.  S.  v.  Addyston  Pipe  Co.,  85 
Fed.  271,  281.    (C.  C.  A.  Sixth  Circuit,  1898.) 

§  177.  Promotion  of  Legitimate  Business. 

"  An  agreement  entered  into  for  the  purpose  of  promot- 
ing the  legitimate  business  of  an  individual  or  corporation, 
with  no  purpose  to  thereby  affect  or  restrain  interstate 
commerce,  and  which  does  not  directly  restrain  such  com- 
merce, is  not,  as  we  think,  covered  by  the  act,  although 
the  agreement  may  indirectly  and  remotely  affect  that 
commerce."  (Mr.  Justice  Peckham.)  U.  S.  v.  Joint 
Traffic  Association,  171  U.  S.  505,  568  (1898). 

"Where  the  subject-matter  of  the  agreement  does  not 
directly  relate  to  and  act  upon  and  embrace  interstate 
commerce,  and  where  the  undisputed  facts  clearly  show 


90  Manual  of  the  Sherman  Law 

that  the  purpose  of  the  agreement  was  not  to  regulate, 
obstruct  or  restrain  that  commerce,  but  that  it  was  en- 
tered into  with  the  object  of  properly  and  fairly  regulating 
the  transaction  of  the  business  in  which  the  parties  to  the 
agreement  were  engaged,  such  agreement  will  be  upheld 
as  not  within  the  statute,  where  it  can  be  seen  that  the 
character  and  terms  of  the  agreement  are  W'ell  calculated 
to  attain  the  purpose  for  which  it  was  formed,  and  where 
the  effect  of  its  formation  and  enforcement  upon  interstate 
trade  or  commerce  is  in  any  event  but  indirect  and  in- 
cidental, and  not  its  purpose  or  object."  {Mr.  Justice 
Peckham.)  Anderso7i  v.  U.  S.,  171  U.  S.  604,  615-616 
(1898). 

§  178.  Sale  With  Covenant  not  to  Compete. 

"Agreements  by  the  seller  of  property  or  business  not 
to  compete  with  the  purchaser  in  such  a  way  as  to  impair 
the  business  sold  are  perfectly  valid,"  (Swan,  District 
Judge.)  A.  Booth  &  Co.  v.  Davis,  127  Fed.  875,  878 
(C.  C— E.  D.  Michigan,  S.  D.  1904) ;  Davis  v.  A.  Booth  & 
Co.,  131  Fed.  31,  38  (C.  C.  A.  Sixth  Circuit,  1904); 
r.  S.  V.  Addijston,  Pipe  &  Steel  Co.,  85  Fed.  271,  281  et  seq. 
(C.  C.  A.  Sixth  Circuit,  1898.) 

Where  a  business  is  purchased  and  the  vendor  continued 
in  charge,  a  covenant  binding  him  not  to  engage  in  the 
same  business  in  the  same  locality  in  his  own  behalf  is  not 
forbidden  by  the  Act.  (See  concurring  opinion  of  Coxe, 
Circuit  Judge.)  U.  S.  v.  Am.  Tobacco  Co.,  164  Fed.  700, 
710.    (C.  C— S.  D.  New  York,  1908.) 

§  179.  Contract  Restriction  Must  not  be  too  Broad. 

While  the  mere  sale  of  a  business  with  an  accompanying 
agreement  not  to  engage  in  a  similar  ])usiness  is  not  or- 
dinarily a  restraint  within  the  meaning  of  the  Sherman 


Contracts  in  Restraint  of  Trade  91 

Act,  yet  where  such  agreement  is  far  more  extensive  in  its 
outlook  and  more  onerous  in  its  intention  than  is  necessary 
to  afford  a  fair  protection  to  the  vendee,  the  agreement  is 
void  as  in  restraint  of  trade  and  against  public  policy. 
Shawnee  Compress  Co.  v.  Anderson,  209  U.  S.  423,  434- 
435  (1908). 

"While  it  is  justly  urged  that  those  rules  which  say  that 
a  given  contract  is  against  pu}:)lic  policy,  should  not  be 
arbitrarily  extended  so  as  to  interfere  with  the  freedom  of 
contract,  .  .  .  yet  in  the  instance  of  business  of  such  char- 
acter that  it  presumably  caimot  be  restrained  to  any  ex- 
tent whatever  without  prejudice  to  the  public  interest, 
courts  decline  to  enforce  or  sustain  contracts  imposing 
such  restraint,  however  partial,  because  in  contravention 
of  public  policy.  .  .  .  Public  welfare  is  first  considered 
and,  if  it  be  not  involved,  and  the  restraint  upon  one  party 
is  not  greater  than  protection  to  the  other  party  requires, 
the  contract  may  be  sustained."  (Mr.  Chief  Justice  Ful- 
ler.)   Gihbs  V.  Baltimore  Gas  Co.,  130  U.  S.  396,  408-409. 

§  180.  Restraint  Must  be  Confined  Within  Proper  Bounds. 

"To  justify  restraint,  reason  for  it  must  be  found  in  the 
nature  of  the  property  or  the  situation  of  the  parties,  as, 
for  instance,  in  the  sale  of  a  business  or  professional  good 
will,  and  other  similar  cases.  Even  then  the  restraint 
must  be  confined  within  such  reasonable  limits  as  the  cir- 
cumstances require."  (Butler,  District  Judge.)  Na- 
tional Harrow  Co.  v.  Hench,  83  Fed.  36,  38.  (C.  C.  A. 
Third  Circuit,  1897.) 

§  181.  Mere  Purchase  or  Sale  with  Incidental  Restraint. 

A  mere  lease  or  purchase;  by  a  farmer,  manufacturer,  or 
merchant  of  an  additional  farm,  manufactory  or  shop,  or 
the  withdrawal  from  business  of  anv  farmer,  merchant  or 


92  Manual  of  the  Sherman  T.aw 

manufacturer  does  not  restrain  commerce  or  trade  within 
the  meaning  of  the  Act.  This  is  true  even  if  there  is  an 
accompanying  agreement  not  to  engage  in  a  similar  l)usi- 
ness,  if  such  agreement  is  collateral  to  the  main  contract, 
and  was  entered  into  for  the  purpose  of  enhancing  the 
price  of  sale.  U.  S.  v.  Joint  Traffic  Asso.,  171  U.  S.  505, 
5G7-568  (1898),  cited  in  concurring  opinion  in  U.  S.  v. 
Am.  Tobacco  Co.,  164  Fed.  700,  710.  (C.  C— S.  D.  New 
York,  1908.) 

§  182.  Protection  of  Good  Will. 

"The  sale  of  a  business  and  the  surrender  of  the  good 
will  pertaining  thereto,  and  an  agreement  thereunder, 
with  reasonable  limitations  as  to  time  and  territory  not  to 
compete  with  the  purchaser,  when  made  as  a  part  of  a 
sale  of  a  business  and  not  as  a  device  to  control  commerce, 
is  not  within  the  Federal  Anti-Trust  Law."  {Per  Curiam.) 
U.  S.  V.  Great  Lakes  Towing  Co.,  208  Fed.  733,  742.  (D. 
C— N.  D.  Ohio,  E.  D.  1913);  Darius  Cole  Transp.  Co.  v. 
White  Star  Line,  186  Fed.  63,  65.  (C.  C.  A.  Sixth  Circuit, 
1911.) 

§  183.  Non-Competing  Covenant  when  Ordinary  Incident. 

"A  sale  or  license,  with  a  covenant  not  to  compete,  made 
as  an  ordinary  incident  to  enhance  the  value  of  the  thing 
conveyed  is  not  within  the  Sherman  Act."  (Brown,  Dis- 
trict Judge.)  (Italics  mine.)  Blount  Mfg.  Co.  v.  Yale  it 
Towne  Mfg.  Co.,  166  Fed.  555,  557  (C.  C.  Mass.  1909); 
Cincinnati  Packet  Co.  v.  Bay,  200  II.  S.  179,  185  (1906); 
U.  S.  V.  Freight  Association,  166  U.  S.  290,  329  (1897). 

§  184.  Text  of  Contract  with  Covenant  not  to  Compete. 

For  the  text  of  a  contract  or  agreement  for  the  sale  of  a 
business  and  property  thereof  with  a  covenant  not  to  com- 


Contracts  in  Restraint  of  Tradk  93 

pete  (lircM'tly  or  indirectly  with  the  purchaser  for  a  period 
of  ten  years,  held  to  be  vahd  under  the  Act,  see  A.  Booth 
&  Co.  V.  Davis,  127  Fed.  875,  877-878  (C.  C— E.  D. 
Michigan,  1904);  Davis  v.  A.  Booth  &  Co.,  131  Fed.  31, 
32-33.    (C.  C.  A.  Sixth  Circuit,  1904.) 

§  185.  Contract  Made  by  Combination  in  Usual  Course  of 
Business. 

A  contract  made  by  a  corporation  in  the  usual  course  of 
its  business  is  not  invalidated  by  such  corporation  being 
a  combination  in  restraint  of  trade  within  the  prohibitions 
of  the  Act.  Connolly  v.  Union  Sewer  Pipe  Co.,  184  U.  S. 
540,  550-551  (1902). 

If,  however,  such  contract  goes  further  and  is  an  "actual 
instrumentality  for  carrying  out  and  putting  into  effect 
the  illegal  combination,  it  is  invaUd  because  an  essential 
part  of  an  alleged  scheme.  Continental  Wall  Paper  Co.  v. 
Voight  &  Sons  Co.,  212  U.  S.  227,  260  et  seq.  (1909). 

§  186.  Agreements  not  to  Bid. 

"It  is  well  settled  that  an  agreement  between  intending 
bidders  at  a  public  auction  or  a  public  letting  not  to  bid 
against  each  other,  and  thus  to  prevent  competition,  is  a 
fraud  upon  the  intending  vendor  or  contractor,  and  the 
ensuing  sale  or  contract  will  be  set  aside."  (Taft,  Circuit 
Judge.)  U.  S.  v.  Addysion  Pipe  &  Steel  Co.,  85  Fed.  271, 
293.    (C.  C.  a.  Sixth  Circuit,  1898.) 

§  187.  Use  of  Guarded  Language  Covering  Real  Purpose. 

Even  where  it  is  sought  to  cover  up  the  purpose  of  the 
contract  by  the  use  of  guarded  language,  such  as  the 
seeking  to  "discourage  unnecessaiy  and  unreasonable 
competition,"  such  language  must  nevertheless  be  taken 
and  construed  in  the  light  of  the  actions  of  the  parties. 


94  Manual  of  the  Sherman  Law 

and  in  view  of  the  attendant  circumstances.  Anderso7i  v. 
Shawnee  Compress  Co.,  87  Pac.  315,  317.  (Oklahoma 
Supreme  Court,  1906.) 

§  188.  Restriction  not  to  Ship  out  of  State. 

"A  (contract  of  sale  by  a  manufacturer  to  jobbers  of 
some  of  its  own  product  to  be  shipped  across  state  lines 
of  the  latter  whereby  the  parties  agree  that  the  purchasers 
shall  not  sell,  ship  or  allow  any  of  the  product  thus  pur- 
chased to  be  shipped  outside  of  a  certain  state  is  not  in 
restraint  of  trade  or  illegal  under  the  Act  of  July  2,  1890." 
{Syllabus  by  the  Court.)  Philips  v.  lola  Portland  Cement 
Co.,  125  Fed.  593.    (C.  C.  A.  Eighth  Circuit,  1903.) 

§  189.  Contracts  Valid  when  Made,  Continue  to  be  Valid. 

"Contracts  which  were  valid  when  made  continue  valid 
and  capable  of  enforcement,  so  long  at  least,  as  peace  lasts 
between  the  governments  of  the  contracting  parties,  not- 
withstanding a  change  in  the  condition  of  business  which 
originally  led  to  their  creating."  {Mr.  Justice  Peckham.) 
Addyslon  Pipe  &  Steel  Co.  w.  U.  S.,  175  U.  S.  211,  234 
(1899). 

§  190.  Legality  Under  State  Law. 

"That  th(;  purchase  was  legal  in  the  State  where  mad(> 
and  within  corporate  powers  conferred  by  state  authority 
constitutes  no  defense,  if  it  contrav(uies  the  provisions  of 
the  Anti-Trust  Act."  {Mr.  Justice  Day.)  U.  S.  v.  Union 
Pacific  R.  R.  Co.,  226  U.  S.  61,  86  (1912). 

§  191.  Where  Seller  no  Longer  Retains  Interest. 

There  is  a  clear  distinction  between  th(;  aggregation  of 
properties  l)y  purchaser  when  the  seller  no  longer  retains 
an  interest  in  the  property,  and  a  combination  of  owners 


Contracts  in  Rp^straint  of  Tradk  95 

and  properties  under  one  management,  where  each  owner's 
interest  is  continued  in  the  combination.  It  may  be  that 
the  former  case  may  affect  interstate  commerce  and  be- 
come injurious  to  the  pubhc,  but  if  so  it  would  seem  that 
the  law  making  power  must  supply  the  correction.  Davis 
V.  A.  Booth  &  Co.,  131  Fed.  31,  37.  (C.  C.  A.  Sixth  Cir- 
cuit, 1904.)  (Note.  Might  be  unlawful  however  as  a  part 
of  a  scheme  of  monopoly.) 

§  192.  Mere  Change  of  Form  of  Investment. 

"Whether  a  transaction  amounts  to  a  sale  or  to  a  com- 
bination depends  upon  whether  the  vendor  parts  with  all 
interests  in  the  business  sold  or  merely  changes  the  form 
of  his  investment.  A  bona  fide  sale  of  a  plant  for  cash  or 
its  equivalent  possesses  none  of  the  elements  of  combina- 
tion. An  exchange  of  one  plant  for  an  interest  in  united 
plants  possesses  all  the  elements  of  combination."  (Notes, 
Circuit  Judge,  concurring  opinion.)  U.  S.  v.  Am.  Tobacco 
Co.,  164  Fed.  700,  718.  (C.  C— S.  D.  New  York,  1908.) 
See  also  Act  of  Oct.  15,  1914  (Clayton  Act),  Sect.  7. 

§  193.  Contract  Partly  Written  and  Partly  Parol. 

Where  an  entire  contract  was  made  in  the  first  instance 
by  parol,  and  only  certain  portions  of  it  were  later  reduced 
to  writing,  all  of  said  contract  can  be  proved  in  order  that 
the  court  from  the  inspection  thereof  in  its  entirety  may  de- 
termine its  character.  McConnell  v.  Camors-McConnell 
Co.,  152  Fed.  321,  330-331.    (C.  C.  A.  Fifth  Circuit,  1907.) 


CHAPTER  IX 


CONSPIRACY 


§  194.  Conspiracy  Defined. 

What  is  "an  unlawful  conspiracy?  I  do  not  mean  by 
this  an  indictable  conspiracy,  because  that  depends  on  the 
statute;  but  was  it  a  conspiracy  at  common  law?  If  it  was, 
then  injury  inflicted  would  be  without  legal  justification, 
and  malicious.  A  conspiracy  is  a  combination  of  two  or 
more  persons  by  concerted  action,  to  accomplish  a  crim- 
inal or  unlawful  purpose,  or  some  purpose  not  in  itself 
criminal  or  unlawful,  by  criminal  or  unlawful  means." 
(Taft,  Circuit  Judge.)  Thomas  v.  Cincinnati,  N.  0.  &  T. 
P.  Ry.  Co.,  62  Fed.  803,  817-818  (C.  C— S.  D.  Ohio, 
W.  D.  1894);  Pettihone  v.  U.  S.,  148  U.  S.  197,  203  (1892); 
U.  S.  V.  Dehs,  64  Fed.  724,  748  (C.  C— N.  D.  Illinois, 
1894);  U.  S.  V.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271, 
293.    (C.  C.  A.  Sixth  Circuit,  1898.) 

§  195.  Common  Design  is  Essence  of  Conspiracy. 

The  common  design  is  the  essence  of  the  charge  and 
arises  out  of  mutual  understanding  arrived  at  by  whatever 
means.  It  is  sufficient  if  two  or  more  persons,  in  any 
manner  or  through  any  contrivance,  positively  or  tacitly 
come  to  a  mutual  understanding  to  accomplish  a  common 
or  unlawful  design,  and  each  one  of  such  persons  becomes 
a  member  of  such  consjnracy  even  though  the  part  he  takes 
is  subordinate  or  to  be  executed  at  a  remote  distance. 

96 


Conspiracy  97 

U.  S.  V.  Cassidy,  67  Fed.  G98,  702.    (D.  C— N.  D.  Cali- 
fornia, 1895.) 

§  196.  Overt  Act  not  Necessary. 

It  is  not  necessarj'  in  actions  brought  under  the  Act  to 
allege  and  prove  commission  of  an  overt  act  as  required 
by  Section  5440  of  the  Revised  Statutes.  The  offense 
aimed  at  is  the  mere  conspiracy  to  restrain  trade  or 
monopolize  interstate  or  international  trade  and  com- 
merce, and  no  more.  U.  S.  v.  Kissel,  173  Fed.  823,  825 
(C.  C— S.  D.  New  York,  1909);  U.  S.  v.  Patterson,  201 
Fed.  697,  722-723  (D.  C— S.  D.  Ohio,  W.  D.  1912); 
U.  S.  v.  Neiv  Departure  Mfg.  Co.,  204  Fed.  107,  111.  (D. 
C. — W.  D.  New  York,  1913.)  See  also  Chapter  herein  on 
Indictments. 

§  197.  Distinguished  from  Contract. 

A  conspirac}'  in  restraint  of  trade  is  different  from  and 
more  than  a  contract  in  restraint  of  trade.  While  con- 
stituted by  an  agreement,  it  is  the  result  thereof  rather 
than  the  agreement  itself,  just  as  a  partnership,  although 
sounding  in  and  arising  out  of  contractual  relations,  is  not 
the  contract  but  is  the  result  of  it.  In  each  case  the  agree- 
ment is  instantaneous,  but  the  results  may  continue  for 
years.  U.  S.  v.  Kissel  &  Harned,  218  U.  S.  601,  608 
(1910). 

§  198.  Continuance  in  Time. 

"A  conspiracy  is  a  partnership  in  criminal  purposes. 
That  as  such  it  may  have  continuation  in  time  is  shown 
by  the  rule  that  an  overt  act  of  one  partner  may  be  the 
act  of  all  without  any  new  agreement  specifically  directed 
to  that  act."  {Mr.  Justice  Holmes.)  U.  S.  v.  Kissel  & 
Harned,  218  U.  S.  601,  608  (1910). 


98  Manual  of  the  Sherman  Law 

§  199.  A  Conspiracy  may  have  Continuance  in  Time.  Time 
not  Essence  of  Conspiracy. 

"It  is  true  that  the  mere  continuance  of  the  result  of 
the  crime  does  not  continue  the  crime.  United  States  v. 
Irvine,  98  U.  S.  450.  But  when  the  plot  contemplates  the 
bringing  to  pass  a  continuous  result  that  will  not  continue 
without  the  continuous  co-operation  of  the  conspirators 
to  keep  it  up,  and  there  is  such  continuous  co-operation, 
it  is  a  perversion  of  natural  thought  and  of  natural  lan- 
guage to  call  such  continuous  co-operation  a  cinemato- 
graphic series  of  distinct  conspiracies,  rather  than  to  call 
it  a  single  one."  {Mr.  Justice  Holmes.)  U.  S.  v.  Kissel  & 
Harned,  218  U.  S.  601,  607  (1910). 

"A  conspiracy  to  restrain  or  monopolize  trade  by  im- 
properly excluding  a  competitor  from  business  contem- 
plates that  the  conspirators  will  remain  in  business  and 
will  continue  their  combined  efforts  to  drive  the  competitor 
out  until  they  succeed.  If  they  do  continue  such  efforts 
in  pursuance  of  the  plan,  the  conspiracy  continues  up  to 
the  time  of  abandonment  or  success."  (Mr.  Justice 
Holmes.)  U.  S.  v.  Kissel  &  Harned,  218  U.  S.  601,  607- 
608  (1910). 

While  time  is  held  to  be  the  essence  of  conspiracj^  in 
Massachusetts,  Maine  and  Texas,  this  has  been  thought 
a  local  peculiarity  and  has  no  application  in  the  federal 
courts.  U.  S.  V.  Kissel  &  Harned,  218  U.  S.  601,  609-610 
(1910). 

§  200.  Two  or  More  Persons. 

The  gist  of  conspiracy  is  the  unlawful  agreement, — that 
is,  that  two  or  more  persons  shall  form  a  plan  for  concerted 
action.  A  verdict  of  guilty,  therefore,  must  necessarily  be 
predicated  upon  the  guilt  of  at  least  two  persons.  A  con- 
spiracy cannot  be  committed  by  one  person,  alone.    There 


Conspiracy  99 

must  be  two  wills  acting  in  co-operation.  Where  the  in- 
dictment charged  certain  defendants  conspired  among 
themselves,  at  least  two  of  such  defendants  must  be  guilty 
although  divers  other  persons  unknown  may  be  con- 
cerned. The  verdict  of  guilty  cannot  be  formed  against 
one  defendant.  U .  S.  v.  American  Naval  Stores  Co.,  172 
Fed.  455,  460.  (Charge  to  Jury.)  (C.  C— S.  D.  Georgia, 
1909.) 

§  201.  Act  of  One  is  Act  of  All. 

"Where  several  persons  are  proved  to  have  combined 
together  for  the  same  illegal  purpose,  any  act  done  by  one 
of  the  parties  in  pursuance  of  the  original  concerted  plan, 
and  with  reference  to  the  common  object  is,  in  the  con- 
templation of  the  law,  the  act  of  the  whole  party."  (Mor- 
row, District  Judge.)  U.  S.  v.  Cassidy,  67  Fed.  698,  702- 
703.    (D.  C— N.  D.  California,  1895.) 

§  202.  Aiding  in  Performance. 

"If  a  series  of  acts  are  to  be  performed  with  a  view  to 
produce  a  particular  result,  he  who  aids  in  the  performance 
of  any  one  of  these  acts,  in  order  to  bring  about  the  result, 
must  have  the  intention  to  effectuate  the  end  proposed 
and  if  he  operates  with  the  others,  knowing  them  to  have 
the  same  design,  there  is  in  fact  an  agreement  between 
him  and  them.  His  criminal  intent  is  not  to  be  distin- 
guished from  the  intent  of  those  who  first  formed  the 
plans  of  the  conspiracy."  People  v.  Mather,  4  Wend. 
(N.  Y.)  230,  260,  cited  with  approval  by  Sanborn,  Circuit 
Judge,  in  U.  S.  v.  Standard  Oil  Co.  of  New  Jersey,  152 
Fed.  290,  295.    (C.  C— E.  D.  Missouri,  E.  D.  1907.) 

§  203.  Joining  After  Formation  of  Conspiracy. 

Anyone  who,  after  a  conspiracy  is  formed,  and  who 


100  Manual  of  the  Sherman  Law 

knows  of  its  existence,  joins  therein  in  promotion  of  the 
common  cause,  becomes  as  much  a  party  thereto  from  that 
time,  as  if  he  had  originally  conspired.  U.  S.  v.  Cassidy, 
67  Fed.  698,  702.  (D.  C— N.  D.  California,  1895.)  U.  S. 
V.  Standard  Oil  Co.  of  New  Jersey,  152  Fed.  290,  294-295 
(C.  C— E.  D.  Missouri,  E.  D.  1907)  and  cases  cited; 
Jayne  v.  Loder,  149  Fed.  21,  30.  (C.  C.  A.  Third  Circuit, 
1906.) 

§  204.  Corporation  can  Conspire. 

A  corporation  can  conspire;  and  the  old  notion  has  long 
since  vanished,  that  a  corporation  is  not  responsible  for 
doing  anything  which  is  not  authorized  by  its  charter. 
U.  S.  V.  MacAndrews  v.  Forbes  Co.,  149  Fed.  823,  835. 
(C.  C— S.  D.  New  York,  1906.) 

While,  however,  a  corporation  may  conspire  with  other 
corporations  and  with  individuals,  it  may  not  conspire 
wth  its  own  officers,  directors  or  agents.  U.  S.  v.  Amer- 
ican Naval  Stores  Co.,  172  Fed.  455,  463.  (C.  C— S.  D. 
Georgia,  E.  D.  1909.) 

§  205.  Not  to  be  Judged  by  Legality  of  Dismembered  Parts. 

"The  character  and  effect  of  a  conspiracy  is  not  to  be 
judged  by  dismembering  it  and  viewing  its  separate  parts, 
but  only  by  looking  at  it  as  a  whole."  (Mr.  Justice  Van 
Devanter.)    U.  S.  v.  Patten,  226  U.  S.  525,  544  (1913). 

§  206.  Conspirators  not  all  Traders. 

There  is  no  need  to  allege  and  prove  in  support  of  an  in- 
dictment for  a  conspiracy  under  the  Sherman  Act  that  all 
the  conspirators  were  traders.  Nash  v.  U.  S.,  229  U.  S. 
373,  379  (1913). 

§  207.  Conspiracy  to  Run  a  Corner. 

A  conspiracy  to  run  a  corner  in  the  available  supply  of 


Conspiracy  101 

a  staple  commodity,  such  as  cotton,  normally  a  subject 
of  trade  and  commerce  among  the  States,  and  thereby  to 
enhance  artificially  its  price  throughout  the  country  is 
within  the  terms  of  Sect.  1,  of  the  Anti-Trust  Act.  U.  S.  v. 
Patten,  226  U.  S.  525,  540-541  (1913). 

"It  may  well  be  that  running  a  corner  tends  for  a  time 
to  stimulate  competition;  but  this  does  not  prevent  it  from 
being  a  forbidden  restraint,  for  it  also  operates  to  thwart 
the  usual  laws  of  supply  and  demand,  to  withdraw  the 
commodity  from  the  normal  current  of  trade,  to  enhance 
the  price  artificially,  to  hamper  users  and  customers  in 
satisfying  their  needs,  and  to  produce  practically  the 
same  evils  as  does  the  suppression  of  competition."  {Mr. 
Justice  Van  Devanter.)  U.  S.  v.  Patten,  226  U.  S.  525, 
542  (1913). 

§  208.  Circumstantial  Evidence. 

Conspirators  "do  not  advertise  their  purposes  openly, 
their  methods  are  secret,  sinister  and  clandestine.  It  is 
rare,  indeed,  that  a  conspiracy  is  proved  by  direct  evi- 
dence. In  a  vast  majority  of  cases  circumstantial  evidence 
is  relied  on.  Such  evidence  is  as  efficacious  as  direct  if  it 
established  the  proposition  that  the  defendants,  or  some 
of  them,  had  a  common  purpose  to  violate  the  law  which 
they  succeeded  in  accomplishing."  (Coxe,  Circuit  Judge.) 
Hale  V.  Hatch  &  North  Coal  Co.,  204  Fed.  433,  435.  (C.  C. 
A.  Second  Circuit,  1913.)  Marrash  v.  U.  S.,  168  Fed. 
225,  229  (C.  C.  A.  Second  Circuit,  1909). 

§  209.  Order  of  Proof. 

The  rule  in  the  admission  of  evidence  in  conspiracy  cases 
is  to  require  first  the  proof  of  a  prima  facie  case  of  con- 
spiracy before  the  acts  and  declarations  of  co-conspirators 
made  in  the  absence  of  the  defendants  are  admitted  against 


102  Manual  of  the  Sherman  Law 

them.  The  court  may  however  exercise  its  discretion  in 
permitting  such  evidence  to  be  admitted  out  of  order. 
Loder  v.  Jayne,  142  Fed.  1010,  1015-1016.  (C.  C— E.  D. 
Pennsylvania,  1906.) 


CHAPTER  X 


COMBINATIONS 


§  210.  Meaning  of  Combination. 

"'Combination'  is  a  word  not  yet  possessed  of  an  ac- 
curate legal  meaning;  its  place  in  the  terminology  of  the 
criminal  law,  I  believe,  is  no  older  than  this  statute.  Of 
itself  it  means  no  more  than  'co-operation' — a  union  of 
effort."  (Hough,  District  Judge.)  U.  S.  v.  MacAndrews 
&  Forbes  Co.,  149  Fed.  823,  831.  (C.  C— S.  D.  New 
York,  1906.) 

§  211.  Combination  in  the  Form  of  Trust. 

"What  is  commonly  termed  a  'trust'  was  a  species  of 
combination  organized  by  individuals  or  corporations  for 
the  purpose  of  monopolizing  the  manufacture  of  or  traffic 
in  various  articles  and  commodities,  which  was  well  known 
and  fully  understood  when  the  Anti-Trust  Act  was  ap- 
proved. Combinations  in  that  form  were  accordingly 
prohibited;  but  Congress,  evidently  anticipating  that  a 
combination  might  be  otherwise  formed,  was  careful  to 
declare  that  a  combination  in  any  other  form,  if  in  restraint 
of  interstate  commerce — that  is,  if  it  directly  occasioned 
or  effected  said  restraint — should  likewise  be  deemed 
illegal."  (Thayer,  Circuit  Judge.)  U.  S.  v.  Northern 
Securities  Co.,  120  Fed.  721,  724.  (C.  C.  Minnesota,  3d 
Dist.,  1903.) 

§  212.  Trust  Defined. 

"A  more  modern  definition  of  a  trust  declares  it  to  be 
103 


104  Manual  of  the  Sherman  Law 

'any  compact  between  two  or  more  persons  or  corpora- 
tions, affecting  any  article  or  commodity  of  which  the 
public  must  have  a  constant  supply,  the  intent  and  direct 
tendency  of  such  an  arrangement  being  the  creation  of  a 
scarcity  or  the  enhancement  of  the  price.'"  (Speer, 
District  Judge.)  In  re  Charge  to  Grand  Jury,  151  Fed.  834, 
835.    (D.  C— E.  D.  Georgia,  1907.) 

§  213.  Form  of  Combination  is  Immaterial. 

"It  matters  not  whether  the  combination  be  'in  the 
form  of  a  trust  or  otherwise,'  whether  it  be  in  the  form  of 
a  trade  association,  or  a  corporation,  if  it  arbitrarily  uses 
its  power  to  force  weaker  competitors  out  of  business,  or  to 
coerce  them  into  a  sale  to  or  union  with  the  combination, 
it  puts  a  restraint  upon  interstate  commerce,  and  monop- 
olizes or  attempts  to  monopolize  a  part  of  that  commerce, 
in  a  sense  that  violated  that  Act."  (Lanning,  Circuit 
Judge.)  U.  S.  v.  Du  Pont  DeNemours  tfc  Co.,  188  Fed. 
127,  151.    (C.  C.  Delaware,  1911.) 

"No  weight  is  attached,  therefore,  to  the  means  by 
which  the  combination  was  formed  if  a  combination 
within  the  purview  of  the  statute  was  created.  That  it 
was  a  combination  of  five  companies  is  clear.  The  fact 
that  this  combination  took  the  form  of  a  new  corporation 
is  immaterial."  (Smith,  Circuit  Judge.)  U.  S.  v.  Inter- 
national Harvester  Co.,  214  Fed.  987,  994.  (D.  C.  Minne- 
sota, 1914.) 

§  214.  Two  or  More  Persons  Necessary  to  Create  Combina- 
tion, 
"The  union  of  two  or  more  persons,  the  conscious  par- 
ticipation in  the  scheme  of  two  or  more  minds,  is  indis- 
pensable to  an  unlawful  combination,  and  it  cannot  be 
created  by  one  man  alone."     (Sanborn,  Circuit  Judge.) 


Combinations  105 

Union  Pacific  Coal  Co.  v.  U.  S.,  173  Fed.  737,  745.    (C.  C. 
A.  Eighth  Circuit,  1909.) 

§  215.  Later  Members  of  Combination. 

Combination  means  no  more  than  co-operation,  a  union 
of  effort,  and  it  makes  "no  difference  whether  those  per- 
sonally assisting  in  or  contributing  to  such  wrongful  result 
were  original  laborers  in  the  vineyard  or  came  in  at  the 
eleventh  hour."  (Hough,  District  Judge.)  U.  S.  v.  Mac- 
Andrews  &  Forbes  Co.,  149  Fed.  823,  831.  (C.  C— S.  D. 
New  York,  1906.) 

§  216.  Where  Combination  Antedated  Corporation. 

A  defendant  company  may  make  itself  a  party  to  a 
combination  in  restraint  of  interstate  conmierce  that  ante- 
dated its  organization,  where  it  is  itself  the  instrument  of 
the  very  individuals  who  promoted  such  combination, 
in  which  case  it  becomes  a  party  as  soon  as  it  comes  into 
existence.  U.  S.  v.  Northern  Securities  Co.,  120  Fed. 
721,  730  (C.  C.  Minnesota,  3d  C,  1903);  Northern  Se- 
curities Co.  V.  U.  S.,  193  U.  S.  197,  357  (1904);  Tribolet 
V.  U.  S.,  95  Pac.  85,  88.  (Supreme  Court  Arizona, 
1908.) 

§  217.  Continuing  Offense  Under  the  Act. 

"The  condition  or  state  of  facts  against  which  the 
statute  is  directed  is  a  continuing  condition,  and  therefore 
the  offense  of  creating  and  maintaining  that  condition  is 
necessarily  a  continuing  offense."  It  requires  "time  for 
the  working  parts  of  the  combination  to  become  co- 
operative or  for  the  monopoly  to  become  more  than  a 
hope."  (Hough,  District  Judge.)  (Italics  mine.)  U.  S. 
V.  MacAndrews  &  Forbes  Co.,  149  Fed.  823,  830.  (C.  C— 
S.  D.  New  York,  1906.) 


lOG  Manual  of  the  Sherman  Law 

"The  agreement  in  question  is  a  continuing  one.  The 
parties  to  it  adopt  certain  machinery,  and  agree  to  certain 
methods  for  the  purpose  of  estabUshing  and  maintaining 
in  the  future  reasonable  rates  for  transportation.  Assum- 
ing such  action  to  have  been  legal  at  the  time  the  agree- 
ment was  first  entered  into,  the  continuation  of  the  agree- 
ment, after  it  has  been  declared  to  be  illegal,  becomes  a 
violation  of  the  act.  The  statute  prohibits  the  continuing 
or  entering  into  such  an  agreement  for  the  future  and  if 
the  agreement  be  continued  it  then  becomes  a  violation 
of  the  act."  (Mr.  Justice  Peckham.)  U.  S.  v.  Freight 
Assji.,  166  U.  S.  290,  342  (1897). 

§  218.  Combination  WhoUy  Within  State. 

"Although  the  jurisdiction  of  Congress  over  commerce 
among  the  States  is  full  and  complete,  it  is  not  questioned 
that  it  has  none  over  that  which  is  wholly  within  a  State, 
and  therefore  none  over  combinations  or  agreements  so 
far  as  they  relate  to  a  restraint  of  such  trade  or  com- 
merce. It  does  not  acquire  any  jurisdiction  over  that 
part  of  a  combination  or  agreement  which  relates  to  com- 
merce wholly  within  a  State,  by  reason  of  the  fact  that 
the  combination  also  covers  and  regulates  commerce 
which  is  interstate.  The  latter  it  can  regulate,  while  the 
former  is  subject  alone  to  the  jurisdiction  of  the  State." 
(Mr.  Justice  Peckham.)  Addyston  Pipe  &  Steel  Co.  v. 
U.  S.,  175  U.  S.  211,  247  (1899). 

§  219.  Combination  Formed  Abroad. 

I'he  fact  that  a  combination  in  restraint  of  trade  was 
formed  abroad  is  immaterial  where  it  affects  the  foreign 
commerce  of  this  country  and  is  put  into  operation  here, 
Thomsen  v.  Union  Castle  Mail  S.  S.  Co.,  166  Fed.  251,  253. 
(C.  C.  A.  Second  Circuit,  1908.) 


Combinations  107 

"Citizens  of  foreign  countries  are  not  free  to  restrain  or 
monopolize  the  foreign  commerce  of  this  country  by  en- 
tering into  combinations  abroad  or  by  employing  foreign 
vessels  to  effect  their  purpose."  (Noyes,  Circuit  Judge.) 
U.  S.  V.  Hamburg-Amer.,  etc.,  Gesellshaft,  200  Fed.  806, 
807.    (C.  C— S.  D.  New  York,  1911.) 

§  220.  Combination  Operating  Abroad  Solely. 

It  is  sufiicient  to  exclude  an  examination  by  anj^  of  the 
federal  courts  of  the  lawfulness  of  acts  complained  to  be 
in  violation  of  the  Sherman  Law  that  said  acts  were  com- 
mitted in  territory  over  which  a  foreign  state  was  de  facto 
sovereign.  Am.  Banana  Co.  v.  United  Fruit  Co.,  166  Fed. 
261,  266.    (C.  C.  A.  Second  Circuit,  1908.) 

§  221.  Combination  Operating  only  in  Part  Within  United 
States. 
Any  control  exercised  over  transportation  in  the  United 
States  is  within  the  jurisdiction  of  its  laws.  While  the 
federal  courts  cannot  reach  foreign  citizens  or  corporations 
operating  in  foreign  countries,  such  courts  certainly  may 
exercise  control  over  such  citizens  and  corporations  oper- 
ating within  the  territorial  limits  of  the  United  States. 
U.  S.  V.  Pacific  &  Artie  Co.,  228  U.  S.  87,  106  (1913). 

§  222.  Combination  Solely  for  Greater  Efficiency. 

"Tlie  combination  of  various  elements  of  machinery,  all 
relating  to  the  same  art  and  the  same  school  of  manu- 
facture, for  the  purpose  of  constructing  economically  and 
systematically,  and  of  furnishing  any  customers,  the  whole 
or  any  part  of  an  entire  system,  is  in  strict  and  normal 
compliance  with  modern  trade  progress."  (Putnam,  Cir- 
cuit Judge.)  U.  S.  v.  Winslow,  195  Fed.  579,  592.  (D.  C. 
Mass.  1912.) 


108  Manual  of  the  Sherman  Law 

§  223.  Blacklisting  of  Competitors. 

A  combination  of  retail  lumber  dealers  designed  to  pre- 
vent wholesalers  from  engaging  in  the  retail  trade  carried 
on  in  several  states,  any  competing  wholesaler  being 
blacklisted  and  reported  to  each  retailer  in  pursuance  of 
said  purpose,  is  within  the  prohibition  of  the  act,  the 
tendency  of  said  reports  being  to  withhold  patronage  from 
the  listed  concerns.  Eastern  States  Retail  Lumber  Dealers^ 
Assn.  V.  U.  S.,  234  U.  S.  GOO,  605  et  seq.  (1914);  Lawlor  v. 
Loewe,  235  U.  S.  522,  534  (1915). 

§  224.  Illegal  Combination  Each  Part  of  Which  Taken  Alone 
is  Lawful. 

While  a  retail  dealer  has  the  unquestioned  right  to  stop 
dealing  with  a  wholesaler  for  reasons  sufficient  to  himself, 
quite  another  case  is  presented  when  a  number  of  retail 
dealers  combine  and  agree  that  no  one  of  them  will  trade 
with  any  producer  or  wholesaler  within  a  trade  range  of 
any  of  them.  An  act  although  harmless  when  done  by 
one  alone,  may  become  a  public  wrong  Avhen  one  of  similar 
acts  done  by  many  in  concert.  Eastern  States  Retail 
Lumber  Dealers'  Assn.  v.  U.  S.,  234  U.  S.  600,  614  (1914). 

"A  series  of  acts  each  of  which  may  bo  innocent  in  itself, 
may  be  wrongful  if  the  direct  object,  purpose  and  result 
thereof  be  to  carry  into  effect  a  combination  whereby  the 
free  flow  of  commerce  between  the  states  ...  is  ob- 
structed." (Evans,  District  Judge.)  Monarch  Tobacco 
Works  V.  Am.  Tobacco  Co.,  165  Fed.  774,  780.  (C.  C— 
W.  D.  Kentucky,  1908.) 

§  225.  Control  of  Resale  Prices. 

Manufacturing  concerns  are  within  the  prohibitions  of 
the  Sherman  Law  when  they,  by  means  of  contracts  with 
their  jobbers,  or  wholesale  and  retail  dealers,  control  and 


Combinations  109 

maintain  the  resale  prices  of  their  products  where  com- 
petition l^etween  such  dealers  is  thereby  extinguished;  and 
this  is  true  whether  such  result  is  accomplished  by  a  com- 
bination of  several  manufacturers  acting  through  a  single 
selling  agency,  or  by  a  single  manufacturer  acting  directly 
through  a  system  of  restrictive  agreements.  Continental 
Wall  Paper  Co.  v.  Voight  &  Sons  Co.,  212  U.  S.  227,  261 
(1909);  Dr.  Miles  Medical  Co.  v.  John  D.  Park  &  Sons  Co., 
220  U.  S.  373,  408  (1911). 

Where  two  or  more  competing  concerns  combine  and 
agree  to  fix  retail  prices  and  not  to  sell  to  any  wholesaler 
who  sells  to  any  retailer  or  jobber  who  cuts  the  prices  of 
any  one  of  said  concerns,  such  combination  or  agreement 
is  within  the  prohibition  of  the  Act.  Jayne  v.  Loder,  149 
Fed.  21,  27.    (C.  C.  A.  Third  Circuit,  1906.) 

§  226.  Power  to  Fix  Prices  Placed  by  Competitors  in  Single 
Control. 
"A  combination  or  an  agreement  is  within  the  con- 
demnation of  the  Act  which  places  the  power  in  the  hands 
of  a  controlling  or  selling  company  to  fix  the  prices  to 
consumers  and  dealers  of  the  commodity  produced  by 
those  in  the  combination,  and  who  had  theretofore  been 
competitors,  and  to  sell  or  not  to  sell  at  all  such  production, 
and  also  fix  or  determine  the  class  or  classes  of  persons  who 
shall  he  permitted  to  purchase  and  sell  or  deal  in  such  com- 
modity. The  exercise  of  such  a  power  would  clearly  inter- 
fere with  and  restrict  the  '  free  flow  of  commerce.' "  (Ray, 
District  Jndge.)  O'Halloraii  v.  American  Sea  Green  Slate 
Co.,  207  Fed.  187,  193.    (D.  C— N.  D.  New  York,  1913.) 

§  227.  Sole   Purpose   to   Destroy   Competition   and   to   Fix 
Prices. 
"Agreements  or  combinations  between  dealers,  having 


110  Manual  of  the  Sherman  Law 

for  their  sole  purpose  the  destruction  of  competition  and 
the  fixing  of  prices,  are  injurious  to  the  pubhc  interest  and 
void."  (Mr.  Justice  Hughes.)  Dr.  Miles  Medical  Co.  v, 
John  D.  Park  &  Sons  Co.,  220  U.  S.  373,  408  (1911). 

"It  may  be  yet  regarded  as  well  settled  that  a  combina- 
tion formed  for  the  express  purpose  and  with  the  express 
intent  of  eliminating  natural  and  existing  competition  in 
interstate  commerce,  and  of  monopolizing  and  restraining 
such  interstate  commerce,  by  the  employment  of  unusual 
and  abnormal  methods  of  business,  constitutes  undue 
restraint  or  suppression,  and  so  offends  against  the  anti- 
trust act."  (Per  Curiam.)  U.  S.  v.  Great  Lakes  Towing 
Co.,  208  Fed.  733,  741.    (D.  C— N.  D.  Ohio,  E.  D.  1913.) 

§  228.  Presumption  of  Illegitimate  Purpose. 

"  There  is  a  distinction  between  coml)ination  and  agree- 
ments that  were  entered  into  with  the  legitimate  purpose 
of  reasonably  forwarding  personal  interest  and  developing 
trade,  and  those  that  give  rise  to  the  inference  or  presump- 
tion they  had  been  entered  into  with  intent  to  do  wrong  to 
the  general  public  and  to  limit  the  right  of  individuals, 
thus  restraining  the  free  flow  of  commerce,  and  tending  to 
bring  about  the  evils,  such  as  the  enhancement  of  prices 
which  were  considered  to  be  against  public  policy." 
(Ray,  District  Judge.)  O'Halloran  v.  American  Sea  Green 
Slate  Co.,  207  Fed.  187,  192  (D.  C— N.  D.  New  York, 
1913);  U.  S.  V.  International  Harvester  Co.,  214  Fed.  987. 
(D.  C.  Minnesota,  1914.) 

§  229.  Total  Suppression  of  Trade  Unnecessary. 

"It  is  not  necessary  to  prove  a  total  suppression  of 
trade.  It  is  only  essential  to  show  that  by  its  necessary 
operation  it  tends  to  restrain  interstate  or  international 
trade  or  tends  to  create  a  monopoly  in  such  trade  or  com- 


Combinations  111 

merce  and  to  deprive  the  public  of  the  advantages  that 
flow  from  free  competition."  (Coxe,  Circuit  Judge,  con- 
curring opinion.)  U.  S.  v.  Am.  Tobacco  Co.,  164  Fed.  700, 
707.    (C.  C— S.  D.  New  York,  1908.) 

"Total  suppression  of  the  trade  in  the  commodity  is  not 
necessary  in  order  to  render  the  combination  one  in  re- 
straint of  trade.  It  is  the  effect  of  the  combination  in 
limiting  and  restricting  the  right  of  each  of  the  members 
to  transact  business  in  the  ordinary  way,  as  well  as  its 
effect  upon  the  volume  or  extent  of  the  dealing  in  the 
commodity,  that  is  regarded."  (Mr.  Justice  Peckham.) 
Addyston  Pipe  &  Steel  Co.  v.  U.  S.,  175  U.  S.  211,  245 
(1899). 

§  230.  Combination  Need  not  Effect  Complete  Monopoly. 

In  order  to  bring  a  combination  within  the  prohibitions 
of  the  statute  it  is  not  necessary  to  show  that  a  complete 
and  nation  wide  monopoly  has  actually  been  created,  or 
that  the  entire  trade  or  business  and  production  of  an 
article  has  been  brought  within  the  control  of  the  combina- 
tion, or  ever  will  be.  It  is  sufficient  if  it  be  shown  that  the 
combination  effects  a  restraint  of  trade  of  interstate  com- 
merce to  a  substantial  degree.  O'Halloran,  v.  American 
Sea  Green  Slate  Co.,  207  Fed.  187,  191.  (D.  C— N.  D. 
New  York,  1913.) 

§  231.  Unusual  and  Abnormal  Methods. 

It  is  "well  settled  that  a  combination  formed  for  the 
express  purpose  and  with  the  express  intent  of  eliminating 
natural  and  existing  competition  in  interstate  commerce 
and  of  monopolizing  and  restraining  such  interstate  com- 
merce, by  the  employment  of  unusual  and  abnormal 
methods  of  business,  constitutes  undue  restraint  or  op- 
pression, and  so  offends  against  the  anti-trust  act."    {Per 


112  Manual  of  the  Sherman  Law 

Curiam.)     U.  S.  v.  Great  Lakes  Towing  Co.,  208  Fed.  733, 
741.    (D.  C— N.  D.  Ohio,  E.  D.  1913)  and  cases  cited. 

§  232.  Innocent  Purchaser  of  Commodity  of  Combination. 

Where  a  person  purchases  paper  in  the  ordinary-  course 
of  business  and  is  a  stranger  to  an  unlawful  combination, 
his  obligation  to  pay  is  not  avoided  by  the  provisions  of 
the  act  where  the  sale  has  no  direct  relation  to  such  com- 
bination. Chicago  Wall  Paper  Mills  v.  General  Paper  Co., 
147  Fed.  491,  493-^94  (C.  C.  A.  Seventh  Circuit,  1906) 
and  cases  cited;  Hadley  Dean  P.  G.  Co.  v.  Highland  Co., 
143  Fed.  242,  244  (C.  C.  A.  Eighth  Circuit,  1906) ;  Con- 
nollij  V.  Union  Sewer  Pipe  Co.,  184  U.  S.  540,  545  (1902). 

§  233.  Sale  by  Combination  to  Party  Thereto. 

But  where  an  illegal  combination  engaged  in  interstate 
commerce  seeks  to  enforce  a  contract  for  the  sale  and  pur- 
chase of  goods  which  is  based  upon  agreements  which  are 
essential  parts  of  an  illegal  scheme  to  accomplish  the 
ends  for  which  the  said  combination  was  organized,  federal 
courts  will  not  lend  their  aid  in  realizing  the  fruits  of  its 
illegality.  Continental  Wall  Paper  Co.  v.  Voight,  212  U.  S. 
227,  261-262  (1909). 

§  234.  One  may  do  what  Many  Cannot. 

''One  may  do  in  fixing  and  enforcing  prices,  and  in 
exacting  tribute  from  the  people  and  restraining  inter- 
state commerce,  what  two  or  more  cannot  do  in  pursuance 
of  an  agreement  or  combination."  (Ray,  District  Judge.) 
Bohbs-Merrill  Co.  v.  Straus,  139  Fed.  155,  191.  (C.  C— 
S.  D.  New  York,  1905.) 

One  person  may  purchase  all  of  an  existing  commodity 
and  fix  the  price  at  which  he  will  soil,  l)ut  if  several  owners 
of  portions  of  such  commodity  combine  and  fix  prices. 


Combinations  113 

limit  interstate  commerce,  and  drive  competitors  out  of 
business,  the  combination  thereby  formed  is  illegal. 
Bobbs-Merrill  Co.  v.  Straus,  139  Fed.  155,  191.  (C.  C— 
S.  D.  New  York,  1905.) 

"An  act  which,  if  done  by  an  individual,  may  be  lawful, 
may  become  quite  a  different  thing  when  undertaken  to  be 
done  by  a  confederation  among  many,  having  for  its  in- 
spiration the  purpose  of  injuring  and  destroying  the  prop- 
erty of  another,  by  preventing  him  from  prosecuting  his 
business  by  taking  into  his  service  others  to  supply  the 
places  of  those  who  voluntarily  have  gone  out."  (Philips, 
District  Judge.)  U.  S.  v.  Elliott,  64  Fed.  27,  32.  (C.  C— 
E.  D.  Missouri,  1894.) 

§  235.  Voluntary  Withdrawal. 

The  illegality  of  a  comljination  in  restraint  of  trade  is 
not  excused  because  of  a  stipulation  that  each  or  all  of  the 
members  thereof  could  at  any  time  withdraw.  This  is 
merely  the  recital  of  a  privilege  which  any  party  to  an  un- 
lawful enterprise  inherently  enjoys.  Tift  v.  Southern  Ry. 
Co.,  138  Fed.  753,  763.  (C.  C— W.  D.  Georgia,  S.  D. 
1905.) 

§  236.  Inability  of  Competitors  to  Supply  Market  no  Excuse. 
A  coml)ination  cannot  secure  immunity  for  its  acts  by 
bringing  into  its  fold  all  the  manufacturers  of  its  line  of 
goods,  and  by  intrenching  itself  behind  the  proposition 
that  the  resulting  restraint  of  trade  comes  not  from  the 
combination,  but  from  the  inability  of  others  to  supply  the 
market.  Ellis  v.  Inman,  Poulesen  &  Co.,  131  Fed.  182, 
187.    (C.  C.  A.  Ninth  Circuit,  1904.) 

§  237.  Reduction  of  Prices  for  Time  Being,  no  Excuse. 

"In  business  or  trading  combinations,  they  may  even 
temporarily,  or  perhaps  permanently,  reduce  the  price  of 


114  Manual  of  the  Sherman  Law 

the  article  traded  in  or  manufactured,  b}'  reducing  the 
expense  insepara1)le  from  the  running  of  many  different 
companies  for  the  same  purpose.  Trade  or  commerce 
under  those  circumstances  may  nevertheless  be  badly  and 
unfortunately  restrained  by  driving  out  of  business  the 
small  dealers  and  worthy  men  whose  lives  have  been  spent 
therein,  and  who  might  be  unable  to  readjust  themselves 
to  their  altered  surroundings.  Mere  reduction  in  the  price 
of  the  commodity  dealt  in  might  be  dearly  paid  for  by  the 
ruin  of  said  class,  and  the  absorption  of  control  over  one 
commodity  by  an  all-powerful  combination  of  capital." 
(Mr.  Justice  Peckham.)  U.  S.  v.  Freight  Asso.,  166  U.  S. 
290,  323  (1897);  Chesapeake  &  0.  Fuel  Co.  v.  United  States, 

115  Fed.  610,  623.    (C.  C.  A.  Sixth  Circuit,  1902.) 
"Nor  does  it  make  any  difference  that  rates  for  the  time 

being  may  not  be  raised  and  much  money  be  spent  in  im- 
provements after  the  combination  is  effected.  It  is  the 
scope  of  such  combinations  and  their  power  to  suppress  or 
stifle  competition  or  create  monopoly  which  determines 
the  applicability  of  the  act."  (Mr.  Justice  Day.)  U.  S.  v. 
Union  Pac.  Ry.  Co.,  226  U.  S.  61,  88  (1912). 

§  238.  Improvement  of  Service. 

"The  fact  that  the  towing  and  wrecking  service  has 
been  improved  under  the  Towing  Company's  adminis- 
tration cannot  legalize  the  combination  if  otherwise  un- 
lawful. Not  only  do  good  motives  furnish  no  defense  to  a 
violation  of  the  anti-trust  act  {Standard  Sanitary  Mfg.  Co. 
V.  U.  S.,  226  U.  S.  20;  33  Sup.  Ct.  9,  57  L.  Ed.  107),  but 
we  have  no  right  to  assume  that  the  unsatisfactory  con- 
ditions existing  in  1899  could  not  have  l)een  eliminated  by 
lawful  and  normal  methods."  (Per  Curiam.)  U.  S.  v. 
Great  Lakes  Towing  Co.,  208  Fed.  733,  744.  (D.  C— N.  D. 
Ohio,  E.  D.  1913.) 


Combinations  115 

§  239.  Protection  of  Parties  and  Reasonable  Prices. 

It  is  no  defense  to  a  combination  or  contract  in  restraint 
of  trade  to  show  "that  even  if  it  affected  interstate  com- 
merce, the  contract  or  combination  was  only  a  reasonable 
restraint  upon  a  ruinous  competition,  among  themselves, 
and  was  formed  only  for  the  purpose  of  protecting  the 
parties  thereto  in  securing  prices  for  their  product  that 
were  fair  and  reasonable  to  themselves  and  the  public." 
{Mr.  Justice  Peckham.)  Addyston  Pipe  &  Steel  Co.  v. 
U.  S.,  175  U.  S.  211,  235  (1899). 

''  It  has  been  earnestly  pressed  upon  us  that  the  prices  at 
which  the  cast-iron  was  sold  in  'pay'  territory  were  rea- 
sonable. A  great  many  affidavits  of  purchasers  of  pipe 
in  '  pay '  territory,  all  drawn  by  the  same  hand  or  from  the 
same  model,  are  produced,  in  which  the  affiants  say  that 
in  their  opinion  the  prices  at  which  pipe  has  been  sold  by 
defendants  have  been  reasonable.  We  do  not  think  the 
issue  an  important  one,  because,  as  already  stated,  we  do 
not  think  that  at  common  law  there  is  any  question  of 
reasonableness  open  to  the  courts  with  reference  to  such  a 
contract.  Its  tendency  was  certainly  to  give  defendants 
the  power  to  charge  unreasonable  prices,  and  they  chose 
to  do  so."  (Taft,  Circuit  Judge.)  U.  S.  v.  Addyston  Pipe 
&  Steel  Co.,  85  Fed.  271,  293  (C.  C.  A.  Sixth  Circuit, 
1898);  Addyston  Pipe  &  Steel  Co.  v.  U.  S.,  175  U.  S.  211, 
237-238  (1899). 

§  240.  Continued  Purchases  by  Public  at  Enhanced  Price 
no  Excuse. 
"We  have  no  doubt  that  where  the  direct  and  imme- 
diate effect  of  a  contract  or  combination  among  particular 
dealers  in  a  commodity  is  to  destroy  competition  between 
them  and  others,  so  that  the  parties  to  the  contract  or  com- 
bination may  obtain  increased  prices  for  themselves,  such 


116  Manual  of  the  Sherman  Law 

contract  or  combination  amounts  to  a  restraint  of  trade 
in  the  commodity  even  though  contracts  to  buy  such  com- 
modity at  the  enhanced  price  are  continually  being  made." 
(Mr.  Justice  Peckham.)  Addyston  Pipe  &  Steel  Co.  v. 
U.  S.,  175  U.  S.  211,  244  (1899). 

§  241.  Live  Stock  Exchange. 

Persons  who  are  engaged  in  the  common  business  as 
yard  traders  buying  cattle  at  the  Kansas  City  stock  yards, 
which  come  from  different  states,  may  agree  among  them- 
selves that  they  will  form  an  association  for  the  better 
conduct  of  their  business,  and  that  they  will  not  transact 
business  with  other  yard  traders  who  are  not  members, 
nor  buy  cattle  from  those  who  also  sell  to  yard  traders 
who  are  not  members  of  the  association,  where  such  as- 
sociation does  no  business  itself,  is  open  to  all  traders 
upon  the  same  conditions,  and  its  meml^ers  are  permitted 
to  compete  among  themselves  and  with  those  who  are  not 
members.  There  is  no  feature  of  monopoly  in  the  whole 
transaction.  Anderson  v.  U.  S.,  171  U.  S.  604,  613-614 
(1898). 

§  242.  Increase  of  Profits  and  Prevention  of  Competition. 

''It  was  not  doul)ted,  nor,  indeed,  can  it  be,  that  where 
the  direct  purpose  of  the  contract  in  suit  is  to  establish, 
for  increasing  their  profits,  a  combination  among  manu- 
facturers and  tradesmen  whose  function  is  to  prevent 
competition,  and  thereby  prevent  the  public  from  obtain- 
ing those  articles  which  are  in  general  use,  at  the  prices  at 
which  they  could  be  obtained  as  the  result  of  fair  and  un- 
trammeled  competition,  such  contract  is  unlawful,  and 
cannot  be  enforced."  (Severens,  District  Judge.)  Crav- 
ens V.  Carter-Crume  Co.,  92  Fed.  479,  486.  (C.  C.  A.  Sixth 
Circuit,  1899.) 


Combinations  117 

§  243.  Hardship  Resulting  from  Natural  Industrial  Changes, 
"In  any  great  and  extended  change  in  the  manner  or 
method  of  doing  business  it  seems  to  be  an  inevitable 
necessity  that  distress,  and  perhaps,  ruin  shall  be  its  ac- 
companiment in  regard  to  some  of  those  who  were  engaged 
in  the  old  methods.  A  change  from  stage  coaches  and 
canal  boats  to  railroads  threw  at  once  a  large  number  of 
men  out  of  employment;  changes  from  hand  labor  to  that 
of  machinery,  and  from  operating  machinery  by  hand  to 
the  application  of  steam  for  such  purpose,  leave  behind 
them  for  the  time  a  number  of  men  who  must  seek  other 
avenues  of  livelihood.  These  are  misfortunes  which  seem 
to  be  the  necessary  accompaniment  of  all  great  industrial 
changes."  {Mr.  Justice  Peckham.)  U.  S.  v.  Freight 
Assn.,  166  U.  S.  290,  323  (1897). 

§  244.  But  such  Changes  must  not  be  Brought  About  Arti- 
ficially. 

"It  is  wholly  different,  however,  when  such  changes 
are  effected  by  combinations  of  capital,  whose  purpose  in 
combining  is  to  control  the  production  or  manufacture  of 
any  particular  article  in  the  market,  and  by  such  control 
dictate  the  price  at  which  the  article  shall  be  sold,  the 
effect  being  to  drive  out  of  business  all  the  small  dealers 
in  the  commodity  and  to  render  the  public  subject  to  the 
decision  of  the  combination  as  to  what  price  shall  be  paid 
for  the  article.  In  this  light  it  is  not  material  that  the 
price  of  an  article  may  be  lowered.  It  is  in  the  power  of 
the  combination  to  raise  it,  and  the  result  in  any  event  is 
unfortunate  for  the  country  bj^  depriving  it  of  the  services 
of  a  large  number  of  small  but  independent  dealers  who 
were  familiar  with  the  business  and  who  had  spent  their 
lives  in  it,  and  who  supported  themselves  and  their  fam- 
ilies from  the  small  profits  realized  therein."    {Mr.  Justice 


118  Manual  of  the  Sherman  Law 

Peckham.)    U.  S.  v.  Freight  Assn.,  166  U.  S.  290,  323-324 

(1897). 

§  245.  Effect  of  Fixing  Prices. 

"Where  a  price  is  fixed  arbitrarily  for  which  a  manu- 
factured article  may  be  sold,  it  necessarily  limits  the  pi'o- 
duction  of  that  article  to  the  amount  that  can  be  sold  for 
that  price.  An  increased  price  put  upon  an  article  restricts 
its  sale,  and  the  restricted  sale  necessarily  reduces  the 
production.  It  is  no  answer  to  say:  'We  do  not  restrict 
your  production.  You  may  produce  any  amount  you  like. 
We  only  restrain  your  sale  of  it.'  Is  this  not  practically  a 
Hmit  to  production?  Where  a  pool  or  combination  reserves 
the  right  to  regulate  prices,  they  can,  by  the  manipulation 
of  prices,  drive  their  competitors  out  of  business,  create  a 
monopoly,  and  enhance  at  their  pleasure  the  prices  to 
consumers."  Hester  v.  Brewing  Co.,  161  Pa.  St.  473, 
quoted  by  Morrow,  Circuit  Judge,  in  U.  S.  v.  Coal 
Dealers'  Assn.,  85  Fed.  252,  264.  (C.  C— N.  D.  Cali- 
fornia, 1898.) 

§  246.  Manufacturers'  Agreement  to  Fix  Price  and  not  to 
Sell  to  Purchasers  of  Competitors, 
Where  defendants  are  alleged  to  be  manufacturers  of 
watch  cases  and  to  have  entered  into  an  agreement  to 
maintain  an  arbitrary  fixed  price  for  their  goods,  and  not 
to  sell  any  of  such  goods  to  any  person  or  concern,  what- 
soever, who  shoukl  thereafter  buy  or  sell  any  goods  man- 
ufactured by  the  plaintiff,  such  agreement  does  not  con- 
stitute a  combination  to  monopolize,  particularly  where 
it  does  not  appear  that  either  the  plaintiff  or  defendants 
were  engaged  in  interstate  trade  or  commerce,  or  that  the 
defendants  absorbed  or  intended  to  al)sorl)  the  interstate 
trade  in  said  watch  cases.    Dueber  Watch  Case  Mfg.  Co.  v. 


Combinations  119 

Howard  Watch  Co.,  55  Fed.  851,  853-854.    (C.  C— S.  D. 
New  York,  1893.) 

§  247.  Private  Manufacturers. 

"Combinations  even  among  private  manufacturers  or 
dealers  whereby  interstate  or  international  commerce  is 
restrained  are  equally  embraced  by  the  act."  {Mr.  Jus- 
tice Harlan.)  No.  Securities  Co.  v.  U.  S.,  193  U.  S.  197, 
331  (1904). 

§  248.  Where  Part  of  Combination  are  Manufacturers  only. 

Where  complaint  is  made  against  a  combination  as  a 
whole  which  monopolizes  or  restrains  any  part  of  inter- 
state or  foreign  commerce,  it  is  immaterial  that  there  are 
members  of  such  combination  which  are  manufacturing 
companies  merely.  (Condensed  from  Concurring  Opinion 
of  Judge  Coxe.)  U.  S.  v.  Am.  Tobacco  Co.,  164  Fed.  700, 
705.    (C.  C— S.  D.  New  York,  1908.) 

§  249.  Mere  Control  by  Stock  Ownership. 

The  direct,  immediate,  and  necessary  effect  of  a  control 
by  a  corporation  over  a  competitor  by  stock  ownership  is 
not  taken  alone  a  restraint  of  trade  or  a  monopoly  for- 
bidden by  the  Sherman  Law.  Bigelow  v.  Calumet  & 
Hecla  Mining  Co.,  167  Fed.  704,  715.  (C.  C— W.  D. 
Michigan,  N.  D.  1908.) 

"We  are  unable  to  conclude  upon  this  record  that  mere 
stock  control  of  such  a  company  by  another  in  the  same 
state  either  directly  or  necessarily  destroys  competition 
there,  or  if  it  did,  that  it  results  in  any  such  monopoly  as 
to  directly  or  necessarily  and  immediately  affect  com- 
merce among  the  states."  (Lurton,  Circuit  Judge.) 
Bigelow  v.  Calumet  &  Hecla  Mining  Co.,  167  Fed.  721,  727. 
(C.  C.  A.  Sixth  Circuit,  1909.) 


120  Manual  of  the  Sherman  Law 

Where,  however,  the  effect  of  such  acquisitions  is  "to 
substantially  lessen  competition"  or  "to  tend  to  create  a 
monopoly,"  they  are  now  expressly  forbidden  in  Section  7 
of  the  Clayton  Act  (Act  of  October  15,  1914). 

§  250.  Control  of  Stock  Resulting  in  Direct  Restraint. 

"The  exchange  of  the  stock  or  shares  in  the  ownership 
of  competitive  corporations  engaged  in  interstate  or  in- 
ternational commerce  for  stock  or  shares  in  the  ownership 
of  a  single  corporation,  the  necessary  effect  of  which  is  a 
direct  and  substantial  restriction  of  competition  in  that 
commerce,  constitutes  a  combination  in  restraint  of  com- 
merce among  the  states  or  with  foreign  nations  that  is 
declared  illegal  by  this  (the  Sherman)  Law."  (Sanborn, 
Circuit  Judge.)  U.  S.  v.  Standard  Oil  Co.,  173  Fed.  177, 
179  (C.  C— E.  D.  Missouri,  E.  D.  1909);  Northern  Se- 
curities Co.  V.  U.  S.,  193  U.  S.  197,  354,  366  (1904);  U.  S. 
v.  American  Tobacco  Co.,  164  Fed.  700,  718  (Concurring 
Opinion).    (C.  C— S.  D.  New  York,  1908.) 

It  makes  no  difference  that  instead  of  resorting  to  a 
holding  company,  as  was  done  in  the  Northern  Securities 
Case,  the  controlling  interest  in  the  stock  of  one  corpora- 
tion is  transferred  to  another.  Domination  and  control  and 
power  to  suppress  competition  are  acquired  in  either  case. 
U.  S.  V.  Union  Pac.  K.  R.  Co.,  226  U.  S.  61,  85  (1912). 

§  251.  Holding  Company. 

A  holding  company  organized  and  utilized  as  an  in- 
strumentality for  the  purpose  of  acquiring  a  majority 
stock  interest  in  each  of  two  competing  railroad  companies 
engaged  in  interstate  commerce  and  of  eliminating  all  such 
competition,  is  necessarily  a  combination  which  fully  dom- 
inates the  situation  and  under  which  competition  between 
the  constituent  companies  would  cease,  and  is  a  "trust" 


Combinations  121 

or  combination  witliin  the  meaning  of  the  Act.  Northern 
Securities  Co.  v.  U.  S.,  193  U.  S.  197,  326,  327  (1904). 

§  262.  Dominating  Control  Extinguishing  Competition. 

"A  combination  which  places  the  direct  instrumental- 
ities of  interstate  commerce  in  such  a  relation  as  to  create 
a  single  dominating  control  in  one  corporation,  whereby 
natural  and  existing  competition  in  interstate  commerce 
is  unduly  restricted  or  suppressed,  is  within  the  condemna- 
tion of  the  act."  {Per  Curiam.)  U.  S.  v.  Great  Lakes 
Towing  Co.,  208  Fed.  733,  741-742.  (D.  C— N.  D.  Ohio, 
E.  D.  1913.) 

§  263.  Dominating  Though  not  Majority  Stock  Interest. 

Where  it  appears  that  a  holding  of  stock  is  ample  enough 
to  dominate  a  corporation  and  in  fact  to  control  its  affairs, 
the  fact  that  such  holding  does  not  constitute  a  majority 
of  the  entire  stock  will  not  save  such  domination  from  the 
prohibitions  of  the  Act.  U.  S.  v.  Union  Pac.  R.  R.  Co., 
226  U.  S.  61,  95-96  (1912). 

§  254.  Official  Proclamations  and  Newspaper  Reports. 

Where  in  a  bill  in  equity  brought  by  the  government  it 
was  alleged  that  the  flow  of  commerce  through  the  City 
of  New  Orleans  was  purposely  arrested,  exhibits  in  the 
case  consisting  of  proclamations  by  the  Governor  of 
Louisiana  and  the  Mayor  of  New  Orleans,  taken  from  the 
official  journals,  manifestoes,  and  recitals  of  the  undis- 
proved sayings  of  the  defendants  taken  from  the  news- 
papers, were  introduced  to  show  as  matter  of  history,  the 
vast  proportions  of  the  interruption  caused  l)y  the  defend- 
ants to  the  prosecution  of  all  branches  of  business  within 
said  city,  and  the  purpose  with  which  it  was  done. 
U.  S.  V.  Workinginen's  Amalg.  Council,  54  Fed.  994, 
996-997.     (C.  C— E.  D.  Louisiana,  1893.) 


CHAPTER  XI 

MONOPOLY   AND    ATTEMPTED    MONOPOLY    UNDER   THE   ACT 

§  255.  Modem  Doctrine  of  Monopoly. 

While  at  ancient  common  law  the  idea  of  monopoly  was 
confined  to  the  grant  of  an  exclusive  privilege,  it  is  now 
understood  to  go  much  further  and  to  include  a  condition 
produced  by  the  acts  of  an  individual  or  individuals. 
The  dominant  element  of  monopoly  at  the  present  time 
is  the  excluding  of  others  or  concentration  into  a  single 
person  or  persons  acting  in  concert;  in  other  words  the 
suppression  of  competition  by  an  active  unification  of 
interest  or  management  or  by  agreement  and  concert  of 
action.  Nat'l  Cotton  Oil  Co.  v.  Texas,  197  U.  S.  115,  129 
(1905). 

"The  modern  doctrine  concerning  monopoly  is  but  a 
recognition  of  the  obvious  truth  that  what  a  government 
should  not  grant,  because  injurious  to  the  public  welfare, 
the  individual  should  not  be  allowed  to  secure  and  hold 
by  wrongful  means.  The  baneful  effect  is  the  same, 
whether  the  monopoly  comes  as  a  gift  from  a  government 
or  is  the  result  of  individual  wrongdoing."  (Sanborn, 
Circuit  Judge.)  U.  S.  v.  Standard  Oil  Co.,  173  Fed.  177, 
196.    (C.  C— E.  D.  Missouri,  1909.) 

§  256.  Scope  of  "  Monopolize  "  or  "  Attempt  to  Monopolize." 
In  view  of  the  fact  that  there  are  included  in  the  first 
section  only  those  methods  of  restraining  trade  and  com- 
merce which  were  recognized  to  be  illegal  under  the  exist- 

122 


Monopoly  Under  the  Act  123 

ing  state  of  common  law  at  the  passage  of  the  Act,  it  is 
undoubted  that  such  methods  as  well  as  other  ways  and 
means  Ijy  which  an  undue  restraint  is  arrived  at  are  com- 
prehended by  "monopolize"  and  "attempts  to  monop- 
olize," which  are  construed  by  the  Supreme  Court  to  in- 
clude every  act  bringing  about  the  prohibited  results 
whether  included  within  the  first  section  or  not.  It  fol- 
lows, therefore,  that  the  second  section  is  broader  than 
the  first,  and  comprehends  undue  restraints  of  trade  out- 
side of  those  held  to  be  illegal  at  common  law,  such  as 
methods  employed  by  an  individual  or  corporation  acting 
singly  to  exclude  competitors,  without  contracting,  con- 
spiring or  combining  with  anyone  else,  or  attempts  to 
monopolize  not  necessarily  involving  any  of  the  offenses 
of  the  first  section.  See  Standard  Oil  Co.  v.  U.  S.,  221 
U.  S.  1,  61-62  (1911). 

§  257.  Monopoly  and  Attempt  to  Monopolize. 

"A  'Monopoly'  both  at  common  law  and  under  this 
statute,  implies,  I  think,  the  control  of  goods  or  service 
which  the  public  desires  to  obtain.  An  attempt  to  monop- 
olize means  an  attempt  to  get  control  of  the  industry  in 
which  the  defendant  is  engaged  'by  means  which  prevent 
other  men  from  engaging  in  fair  competition  with  him." 
Re  Greene  (C.  C),  52  Fed.  116;  Joyce  on  Monopolies, 
Sects.  65-69.  There  may  be,  I  think,  an  unreasonable 
restraint  of  trade  which  does  not  constitute  a  monopoly; 
though  there  can  be  no  monopoly  which  does  not  con- 
stitute an  unreasonable  restraint  of  trade."  (Morton, 
District  Judge.)  U.  S.  v.  Whiting,  212  Fed.  466,  478. 
(D.  C.  Mass.  1914.) 

§  258.  Creation  of  Monopoly. 

"A  monopoly  in  the  modern  sense  is  created,  when  as  a 


124  Manual  of  the  Sherman  Law 

result  of  efforts  to  that  end,  previously  competing  busi- 
nesses are  so  concentrated  in  the  hands  of  a  single  person 
or  corporation,  or  a  few  persons  or  corporations  acting 
together,  that  they  have  power  to  practically  control  the 
prices  of  commodities  and  thus  to  practically  suppress  com- 
petition." (Notes,  Circuit  Judge,  Concurring  Opinion.) 
U.  S.  V.  Am.  Tobacco  Co.,  164  Fed.  700,  721,  citing  numer- 
ous cases.    (C.  C— S.  D.  New  York,  1908.) 

§  259.  Attempt  to  Monopolize  Defined. 

"An  'attempt  to  monopolize'  any  part  of  the  trade  or 
commerce  among  the  states  must  be  an  attempt  to  secure 
or  acquire  an  exclusive  right  in  such  part  of  trade  or  com- 
merce by  means  which  prevent  or  restrain  others  from  en- 
gaging therein."  (Jackson,  Circuit  Judge.)  In  re  Greene, 
52  Fed.  104,  116.    (C.  C— S.  D.  Ohio,  W.  D.  1892.) 

§  260.  Exclusion  of  Others  from  Competition. 

According  to  Mr.  Walker,  there  should  be  included  in 
the  meaning  of  monopoly,  prohibited  by  the  Sherman 
Law,  the  idea  of  the  exclusion  of  others  from  the  field  of 
competition  by  the  monopolist  while  acquiring  his  monop- 
oly.   Walker:  Hist.  Sherman  Law,  p.  297. 

"A  'monopoly,'  in  the  prohibited  sense,  involves  the 
element  of  an  exclusive  privilege  or  grant  which  restrained 
others  from  the  exercise  of  a  right  or  liberty  which  they 
had  before  the  monopoly  was  secured."  (Jackson,  Cir- 
cuit Judge.)  In  re  Greene,  52  Fed.  104,  115.  (C.  C— S.  D. 
Ohio,  W.  D.  1892.) 

§  261.  Two  Leading  Elements. 

In  "monopoly"  is  embraced  "two  leading  elements, 
viz.,  an  exclusive  right  or  jjrivilege  on  the  one  side,  and  a 
restriction  or  restraint  on  the  other,  which  will  operate 


Monopoly  Under  the  Act  125 

to  prevent  the  exercise  of  a  right  or  liberty  open  to  the 
public  before  the  monopoly  was  secured."  (Jackson, 
Circuit  Judge.)  In  re  Greene,  52  Fed.  104,  116.  (C.  C. — 
S.  D.  Ohio,  W.  D.  1892.) 

§  262.  Aggregation  or  Concentration  to  the  Exclusion  of 
Others. 
"  In  construing  the  federal  and  state  statutes,  we  exclude 
from  consideration  all  monopolies  which  exist  by  legis- 
lative grant;  for  we  think  the  word  'monopolize'  cannot 
be  intended  to  be  used  with  reference  to  the  acquisition 
of  exclusive  rights  under  government  concession,  but  that 
the  lawTnaker  has  used  the  word  to  mean  'to  aggregate' 
or  'concentrate'  in  the  hands  of  few,  practically,  and,  as  a 
matter  of  fact,  and  according  to  the  known  results  of 
human  action,  to  the  exclusion  of  others;  to  accomplish 
this  end  by  what,  in  popular  language,  is  expressed  in  the 
word  'pooling'  which  may  be  defined  to  be  an  aggregation 
of  property  or  capital  belonging  to  different  persons,  with 
a  view  to  common  liabilities  and  profits.  The  expression 
in  each  law,  '  combination  in  the  form  of  trust '  would  seem 
to  point  to  just  what,  in  popular  language,  is  meant  by 
pooling."  (Per  Curiam.)  American  Biscuit  and  Manfg. 
Co.  V.  Klotz,  44  Fed.  721,  724-725.  (C.  C— E.  D.  Louis- 
iana, 1891.) 

§  263.  Monopoly  of  "  Any  Part." 

The  words  "any  part"  have  both  a  geographical  and 
distributive  significance,  first,  any  portion  of  the  United 
States;  and,  second,  any  one  of  the  classes  of  things  forming 
a  part  of  interstate  or  foreign  commerce.  Standard  Oil 
Co.  V.  C7.  .S.,  221  U.  S.  1,61  (1911). 

§  264.  Monopoly  in  Any  Form. 

"That  the  original  design  to  suppress  trusts  and  monop- 


12t)  Manual  of  the  Sherman  Law 

olies  created  by  contract  or  combination  in  the  form  of 
trust,  which  of  course  would  be  of  a  '  contractual  character' 
was  adhered  to,  is  clear;  but  it  is  equally  clear  that  a  fur- 
ther and  more  comprehensive  purpose  came  to  be  enter- 
tained, and  was  embodied  in  the  final  form  of  the  enact- 
ment. Combinations  are  condemned,  not  only  when  they 
take  the  form  of  trusts,  but  in  whatever  form  found,  if 
they  be  in  restraint  of  trade.  That  is  the  effect  of  the 
words  'or  otherwise.'"  (Woods,  Circuit  Judge.)  U.  S. 
V.  Debs,  64  Fed.  724,  747.    (C.  C— N.  D.  Illinois,  1894.) 

§  265.  Monopoly  by  Any  Person. 

The  monopolization  or  attempt  to  monopolize  which  is 
prohibited  by  Section  2  of  the  Sherman  Law,  can  be  com- 
mitted by  one  person  or  corporation  alone  or  by  any 
numljer  of  persons;  whereas  a  combination  or  conspiracy 
to  violate  the  Sherman  Law  cannot  be  made  by  one  per- 
son only.  U.  S.  V.  MacAndrews  &  Forbes  Co.,  149  Fed. 
823,  826.    (C.  C— S.  D.  New  York,  1906.) 

"One  person  or  corporation  may  offend  against  the 
second  section  by  monopolizing,  but  the  first  section  con- 
templates conduct  of  two  or  more.  A  cursory  reading  of 
the  act  shows  this.  That  it  was  the  intention  of  Congress 
to  condemn  monopolies,  not  based  on  illegal  combinations 
among  several,  but  secured  bj^  single  persons,  natural  or 
artificial,  by  other  means,  also  appears  from  the  history 
of  the  legislation."  (Hook,  Circuit  Judge,  Concurring 
Opinion.)  U.  S.  v.  Standard  Oil  Co.,  173  Fed.  177,  195. 
(C.  C— E.  D.  Missouri,  1909.) 

§  266.  Welding  Together  of  Competing  Corporations. 

"  But  whatever  may  be  the  precise  definition  of  the  word 
monopoly  as  used  in  this  statute,  a  business  device  by 
which  a  considerable  number  of  the  competing  corpora- 


Monopoly  Under  the  Act  127 

tions  are  welded  into  a  single  corporate  entity  which  con- 
trols from  90  to  95  per  cent  of  the  commerce  of  the  country 
in  a  particular  branch  required  for  the  economical  pro- 
duction of  a  necessity  of  mankind  is  a  monopoly."  (Rugg, 
Chief  Justice.)  United  Shoe  Machinery  Co.  v.  La  Chapelle, 
212  Mass.  467,  480.  (Supreme  Court,  Massachusetts, 
1912.) 

§  267.  All  Unlawful  Attempts  to  Restrain  Trade  are  Em- 
braced. 

The  second  section  seeks  to  make  the  prohibitions  of  the 
Act  more  complete  by  embracing  all  attempts  to  restrain 
trade  by  any  attempt  to  monopolize  or  monopolization 
thereof.    Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  1,  61  (1911). 

§  268.  Distinction  Between  Attempt  and  Preparation. 

"Not  every  act  that  may  be  done  with  intent  to  produce 
an  unlawful  result  is  unlawful  or  constitutes  an  attempt. 
It  is  a  question  of  proximity  and  degree.  The  distinction 
between  mere  preparation  and  attempt  is  well  known  in 
the  criminal  law."  {Mr.  Justice  Holmes.)  Swift  &  Co.  v. 
U.  S.,  196  U.  S.  375,  402  (1905). 

§  269.  Direct  or  Indirect  Effect. 

"An  attempt  to  monopolize  a  part  of  interstate  com- 
merce, the  necessary  effect  of  which  is  to  stifle  or  to  di- 
rectly and  substantially  restrict  competition  in  commerce 
among  the  States,  violates  the  second  section  of  this  act. 
But  an  attempt  to  monopolize  a  part  of  interstate  com- 
merce which  promotes,  or  but  indirectly  or  incidentally 
restricts  competition  therein,  while  its  main  purpose  and 
chief  effect  are  to  increase  the  trade  and  foster  the  business 
of  those  who  make  it,  is  not  illegal  under  the  second  sec- 
tion because  such  attempts  are  indispensable  to  the  ex- 


128  Manual  of  the  Sherman  Law 

istence  of  any  competition  in  commerce  among  the  States." 
(Sanborn,  Circuit  Judge.)  Whitwell  v.  Continental  To- 
bacco Co.,  125  Fed.  454,  463.    (C.  C.  A.  Eighth  Circuit.) 

§  270.  Not  Restricted  to  Necessaries  of  Life. 

The  appUcation  of  the  Act  is  not  limited  to  monopoHes 
or  restraints  of  trade  in  the  necessaries  of  hfe,  but  includes 
all  articles  used  in  interstate  or  foreign  trade  or  commerce 
whether  necessaries  of  life  or  not.  U.  S.  v.  E.  C.  Knight 
Co.,  156  U.  S.  1,  12  (1895). 

§  271.  Rule  of  Reason. 

"The  criteria  for  ascertaining  whether  violations  of  the 
second  section  have  been  committed,  is  the  rule  of  reason 
guided  by  the  established  law  and  by  the  plain  duty  to  en- 
force the  provisions  of  the  act."  {Mr.  Chief  Justice 
White.)    Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  1,  62  (1911). 

§  272.  Magnitude  of  Business. 

"Magnitude  of  business  does  not,  alone,  constitute 
monopoly,  nor  effort  at  magnitude  an  attempt  to  monop- 
olize. To  offend  the  act  the  monopoly  must  have  been 
secured  by  methods  contrary  to  the  public  policy  as  ex- 
pressed in  the  statutes  or  in  the  common  law."  (Sanborn, 
Circuit  Judge.)  U.  S.  v.  Sta7idard  Oil  Co.,  173  Fed.  177, 
195  (C.  C— E.  D.  Missouri,  1909);  U.  S.  v.  Am.  Naval 
Stores  Co.,  172  Fed.  455,  458,  459.  (C.  C— S.  D.  Georgia, 
E.  D.  1909.) 

§  273.  Monopoly  Need  not  be  Complete. 

There  need  not  be  a  total  suppression  of  trade  or  a  com- 
plete monopoly;  it  is  enough  if  the  necessary  operation  of 
the  scheme  tends  to  restrain  interstate  commerce,  and  to 
deprive  the  public  of  the  advantage  flowing  from  free 
competition.    Northern  Securities  Co.  v.  U.  S.,  193  U.  S. 


Monopoly  Under  thk  Act  129 

197,  332  (1904);  U.  S.  v.  E.  C.  Knight  Co.,  156  U.  S.  1,  16 
(1895);  U.  S.  V.  MacAndrews  &  Forbes  Co.,  149  Fed.  823, 
833  (C.  C— S.  D.  New  York,  1906) ;  Bigelow  v.  Calumet 
tfc  Hecla  Mining  Co.,  167  Fed.  704,  716  (C.  C— W.  D. 
Michigan,  N.  D.  1908) ;  U.  S.  v.  Great  Lakes  Towing  Co., 
208  Fed.  733,  743.    (D.  C— N.  D.  Ohio,  E.  D.  1913.) 

"The  statute  is  not  limited  to  contracts  or  combinations 
which  monopolize  interstate  commerce  in  any  given  com- 
modity, but  seeks  to  reach  those  which  directly  restrain 
or  impair  the  freedom  of  interstate  trade.  The  law  reaches 
combinations  which  may  fall  short  of  complete  control  of 
a  trade  or  business,  and  does  not  await  the  consolidation 
of  many  small  combinations  into  the  huge  'trusts'  which 
shall  control  the  production  and  sale  of  a  commodit5^" 
(Day,  Circuit  Judge.)  Chesapeake  &  0.  Fuel  Co.  v.  U.  S., 
115  Fed.  610,  624.    (C.  C.  A.  Sixth  Circuit,  1902.) 

§  274.  Necessary  Tendency  is  Sufficient. 

"To  vitiate  a  combination,  such  as  the  act  of  Congress 
condemns,  it  need  not  be  shown  that  the  combination,  in 
fact,  results  or  will  result  in  a  total  suppression  of  trade 
or  in  a  complete  monopoly,  but  it  is  only  essential  to  show 
that  by  its  necessary  operation  it  tends  to  restrain  inter- 
state or  international  trade  or  tends  to  create  a  monopoly 
in  such  trade  or  commerce  and  to  deprive  the  public  of 
the  advantages  that  flow  from  free  competition."  (Mr. 
Justice  Harlan.)  No.  Securities  Co.  v.  U.  S.,  193  U.  S. 
197,  332  (1904);  Chesapeake  &  0.  Fuel  Co.  v.  U.  S.,  115 
Fed.  610,  623  (C.  C.  A.  Sixth  Circuit,  1902);  Bohhs- 
Merrill  Co.  v.  Straus,  139  Fed.  155,  192.  (C.  C— S.  D. 
New  York,  1905.) 

§  275.  No  Defense  that  Trade  is  Uninjured, 

"The  attempt  to  confer  power  to  regulate  and  restrain 


130  Manual  of  the  Sherman  Law 

interstate  commerce  by  contract  is  a  usurpalion  of  the 
functions  of  congress,  and  cannot  be  sustained  upon  the 
ground  that  trade  has  not  in  fact  been  injured."  (Thomp- 
son, District  Judge.)  U.  S.  v.  Chesapeake  &  0.  Fuel  Co., 
105  Fed.  93,  104.    (C.  C— S.  D.  Ohio,  W.  D.  1900.) 

§  276.  Acquirement  of  Potential  Power. 

"Trade  and  commerce  are  'monopolized'  within  the 
meaning  of  the  act,  when,  as  a  result  of  efforts  to  that  end, 
such  power  is  obtained  that  a  few  persons  acting  together 
can  control  the  prices  of  commoditj^  moving  in  interstate 
commerce.  It  is  not  necessary  that  the  power  thus  ob- 
tained be  exercised.  Its  existence. is  sufficient."  (Noyes, 
Circuit  Judge.)  U.  S.  v.  Patten,  187  Fed.  664,  672.  (C. 
C— S.  D.  New  York,  1911). 

"It  must  be  noted  that  the  authorities  hold  that  the 
material  consideration,  in  determining  whether  a  monop- 
oly exists,  is  not  that  prices  are  raised  and  that  competi- 
tion is  excluded,  but  that  power  exists  to  raise  prices  or  to 
exclude  competition  when  it  is  desired  to  do  so.  The 
validity  of  an  organization  according  to  the  authorities 
'  is  not  to  be  tested  by  what  has  been  done  under  it,  but 
by  what  may  be  done  under  it;  not  by  its  performance, 
but  by  its  power  of  performance  when  fully  exercised.'" 
(Notes,  Circuit  Judge,  Concurring  Opinion.)  U.  S.  v. 
Am.  Tobacco  Co.,  164  Fed.  700,  721.  (C.  C— S.  D.  New 
York,  1908)  citing  numerous  cases. 

§  277.  Plan  of  Monopoly  may  make  Parts  Unlawful. 

"No  conduct  has  such  an  absolute  privilege  as  to  justify 
all  possible  schemes  of  which  it  may  be  a  part.  The  most 
innocent  and  constitutionally  protected  of  acts  or  omis- 
sions may  be  made  a  step  in  a  criminal  plot,  and  if  it  is  a 
step  in  a  plot  neither  its  innocence  nor  the  Constitution  is 


Monopoly  Under  the  Act  131 

sufficient  to  prevent  the  punishment  of  the  plot  by  law." 
{Mr.  Justice  Holmes.)  Aikens  v.  Wisconsin,  195  U.  S. 
194,  205  (1905);  Swift  v.  U.  S.,  196  U.  S.  275,  296  (1905); 
Loewe  v.  Lawlor,  208  U.  S.  274,  299  (1908). 

§  278.  Manufacturing  Monopoly  Within  a  State. 

Manufacturing  within  a  State  of  an  article  is  not  within 
the  purview  of  the  act,  although  the  manufacturing  com- 
bination constitutes  a  monopoly.  It  makes  no  difference 
that  the  manufacturer  intends  his  product  for  sale  in  other 
states  and  foreign  countries.  "The  fact  that  an  article  is 
manufactured  for  export  to  another  state  does  not  of  itself 
make  it  an  article  of  interstate  commerce,  and  the  intent 
of  the  manufacturer  does  not  determine  the  time  when 
the  article  or  product  passes  from  the  control  of  the  state 
and  belongs  to  commerce."  (Mr.  Chief  Justice  Fuller.) 
U.  S.  V.  E.  C.  Knight  Co.,  156  U.  S.  1,  13  {1S95) ;  Addyston 
Pipe  &  Steel  Co.  v.  U.  S.,  175  U.  S.  211,  238,  247  (1899); 
Robinson  v.  Suburban  Brick  Co.,  127  Fed.  804,  807.  (C. 
C.  A.  Fourth  Circuit,  1904.) 

"  It  cannot  be  denied  that  the  power  of  a  State  to  protect 
the  lives,  health,  and  property  of  its  citizens,  and  to  pre- 
serve good  order  and  the  public  morals,  'the  power  to 
govern  men  and  things  within  the  limits  of  its  dominion' 
is  a  power  originally  and  always  belonging  to  the  States, 
not  surrendered  by  them  to  the  general  government,  nor 
directly  restrained  b}"  the  Constitution  of  the  United 
States,  and  essentially  exclusive.  The  relief  of  the  citi- 
zens of  each  State  from  the  burden  of  monopoly  and  the 
evils  resulting  from  the  restraint  of  trade  among  such 
citizens  was  left  with  the  States  to  deal  with."  (Mr.  Chief 
Justice  Fuller.)  U.  S.  v.  E.  C.  Knight  Company,  156 
U.S.  1,  11  (1895). 

An  attempt  to  monopolize,  or  the  actual  monopoly  of 


132  Manual  of  the  Sherman  Law 

the  manufacture  of  an  article,  is  not  in  and  of  itself  an 
attempt  to  monopolize  interstate  commerce,  even  though, 
in  order  to  dispose  of  the  product,  the  instrumentalitj-  of 
commerce  is  necessarily  invoked.  U.  S.  v.  E.  C.  Knight 
Co.,  156  U.  S.  1,  17  (1895). 

§  279.  Power  of  State  Legislature. 

"The  ix)wer  of  the  Legislature  to  decide  what  monop- 
olies in  trade  should  be  forbidden  as  injurious  to  the  gen- 
eral welfare  rests  upon  the  same  foundation,  and  (unless 
limited  by  some  provision  in  the  national  Constitution) 
may  be  exercised  as  fully  and  freely,  as  its  power  to  legis- 
late for  the  protection  of  the  public  health  or  the  public 
morals."  Opinion  of  Justices  of  Massachusetts  Supreme 
Court  regarding  the  proposed  Machinery  Bill  of  1907.  Vol- 
ume 193  Mass.  605,  610. 

§  280.  Predictions  of  Ruin. 

"It  is  the  history  of  monopolies  in  this  country  and  in 
England  that  predictions  of  ruin  are  habitually  made  by 
them  when  it  is  attempted,  by  legislation,  to  restrain  their 
operations  and  to  protect  the  public  against  their  exac- 
tions." {Mr.  Justice  Harlan.)  No.  Securities  Co.  v. 
U.  S.,  193  U.  S.  197,  351  (1904). 

§  281.  Natural  Effect  of  Competition. 

"The  natural  effect  of  competition  is  to  increase  com- 
merce, and  an  agreement  whose  direct  effect  is  to  prevent 
this  play  of  competition  restrains  instead  of  promotes 
trade  and  commerce."  (Mr.  Justice  Harlan.)  No.  Se- 
curities Co.  V.  U.  S.,  193  U.  S.  197,  331  (1904). 

"While  absolutely  free  competition  may  have  in  some 
instances  and  for  a  time  resulted  in  injury  to  some  of  the 
railroads,  it  is  not  at  all  clear  that  the  general  result  has 
been  other  than  beneficial  to  the  whole  public,  and  not  in 


Monopoly  Under  the  Act  133 

the  long  run  detrimental  to  the  prosperity  of  the  roads." 
{Mr.  Justice  Peckham.)  U.  S.  v.  Freight  Assn.,  166  U.  S. 
290,  338  (1897). 

§  282.  Normal  Competition  the  Law  of  Trade. 

"Whatever  may  be  the  views  of  indi\'idiial  economists, 
under  the  Federal  statutory  policy  normal  and  healthy 
competition  is  the  law  of  trade;  and  such  evils  as  may  re- 
sult from  such  competition  must  l)e  considered  less  than 
those  liable  to  follow  a  complete  unification  of  interests 
and  the  power  such  unification  gives."  {Per  Curiam.) 
U.  S.  V.  Great  Lakes  Towing  Co.,  208  Fed.  733,  744.  (D. 
C— N.  D.  Ohio,  E.  D.  1913.) 

"Competition,  free  and  unrestricted,  is  the  general  rule 
which  governs  all  the  ordinary  business  pursuits  and 
transactions  of  life.  Evils,  as  well  as  benefits,  result  there- 
from. In  the  fierce  heat  of  competition  the  stronger  com- 
petitor may  crush  out  the  weaker.  Fluctuations  in  prices 
may  be  caused  that  result  in  wreck  and  disaster;  yet, 
balancing  the  benefits  as  against  the  evils,  the  law  of 
competition  remains  as  a  controlling  element  in  the  busi- 
ness world."  (Shiras,  District  Judge,  Dissenting  Opinion.) 
U.  S.  V.  Trans-Missouri  Freight  Assn.,  58  Fed.  58,  94 
(C.  C.  A.  Eighth  Circuit,  1893);  U.  S.  v.  Freight  As.m., 
166  U.  S.  290,  337  (1897).  (Note.  Mr.  Justice  Peckham 
in  latter  case  quotes  language  of  Judge  Shiras  with  ap- 
proval in  reversing  former  case.) 

"Competition  not  combination  should  be  the  law  of 
trade.  If  there  is  evil  in  this  it  is  accepted  as  less  than 
that  which  may  result  from  the  unification  of  interest, 
and  the  power  such  unification  gives."  {Mr.  Justice  Mc- 
Kenna.)  National  Cotton  Oil  Co.  v.  Texas,  197  U.  S.  115, 
129  (1905),  and  cases  cited.  U.  S.  v.  Union  Pacific  R.  R. 
Co.,  226  U.  S.  61,  84  (1912). 


134  Manual  of  the  Sherman  Law 

"Whether  the  free  operation  of  the  normal  laws  of  com- 
petition is  a  wise  and  wholesome  rule  for  trade  and  com- 
merce is  an  economic  question  which  this  court  need  not 
consider  or  determine."  (il/r.  Ji^s/ice  Harlan.)  Northern 
Securities  Co.  v.  U.  S.,  193  U.  S.  197,  337;  U.  S.  v.  Union 
Pacific  Ry.  Co.,  226  U.  S.  Gl,  83  (1912). 

§  283.  That  Monopoly  is  Beneficial  to  Public  is  no  Excuse. 

"But  the  i)olicy  of  the  law  looks  to  competition,  as  the 
best  and  safest  method  of  securing  these  benefits,  and  not 
to  combinations  which  restrain  trade.  It  is  opposed  to 
the  methods  of  combinations,  and  will  not  suffer  competi- 
tion to  be  destroyed  under  the  pretense  that  the  public 
will  be  better  served  by  combination.  In  the  exercise  of 
the  power  of  regulation  conferred  upon  it  by  the  constitu- 
tion, congress  has  chosen  competition,  in  preference  to 
combination,  as  the  best  factor  for  the  maintenance  of  the 
life  and  the  promotion  of  the  ends  of  interstate  commerce." 
(Thompson,  District  Judge.)  U.  S.  v.  Chesapeake  &  0. 
Fuel  Co.,  105  Fed.  93,  103.  (C.  C— S.  D.  Ohio,  W.  D. 
1900.) 

§  284.  Balancing  of  Evils  or  Benefits  of  Monopoly  and  Com- 
petition. 

"The  legality  or  illegality  of  a  combination  is  not  to  be 
determined  •l)y  weighing  or  balancing  the  benefits  to  the 
combining  parties  as  against  the  injury  to  public  or  public 
interests,  or  by  weighing  and  balancing  the  possible  bene- 
fits to  the  public  interests  as  against  the  injury  to  such  in- 
terests." (Ray,  District  Judge.)  O'HaUoran  v.  American 
Sea  Green  Slate  Co.,  207  Fed.  187,  190.  (D.  C— N.  D. 
New  York,  1913.) 

The  true  inquiry  is,  does  the  coml)ination  "tend  directly 
and  appreciably  to  restrain  interstate  commerce.     It  is 


Monopoly  Under  the  Act  135 

not  material  to  ascertain  just  what  proportion  the  result- 
ing restraint  of  interstate  commerce  bears  to  other  effects 
or  results  of  the  combination."  (Gilbert,  Circuit  Judge.) 
Ellis  V.  Inman,  Poulsen  &  Co.,  131  Fed.  182, 186.  (C.  C.  A. 
Ninth  Circuit,  1904.) 

§  285.  Fixing  of  Reasonable  Prices. 

The  illegality  of  a  combination  is  not  excused  or  relieved 
by  the  fact  that  it  was  induced  by  keen  competition  or 
unprofitable  business  conditions  or  by  the  fact  that  the 
prices  fixed  by  the  combination  may  have  been  reasonable. 
Gibbs  V.  M'Neeley,  118  Fed.  120,  122-123  (C.  C.  A.  Ninth 
Circuit,  1902),  and  cases  cited. 

§  286.  Suppression  of  Unreasonable  Competition. 

It  cannot  be  claimed  that  the  suppression  of  unreason- 
able competition  sanctifies  an  agreement  or  combination 
in  restraint  of  trade;  the  common  law  rules  against  restraint 
of  trade  are  founded  upon  the  theory  that  competition  is 
desirable.  Joh7i  D.  Park  &  Sons  Co.  v.  Hartman,  153 
Fed.  24,  44.    (C.  C.  A.  Skth  Circuit,  1907.) 

§  287.  Scheme  of  Monopoly. 

"The  scheme  as  a  whole  seems  to  us  to  be  within  reach 
of  the  law.  The  constituent  elements,  as  we  have  stated 
them,  are  enough  to  give  the  scheme  a  body,  and  for  all 
that  we  can  say  to  accomplish  it.  Moreover,  whatever 
we  may  think  of  them  separately,  when  we  take  them  up 
as  distinct  charges,  they  are  alleged  sufficiently  as  ele- 
ments of  the  scheme.  It  is  suggested  that  the  several  acts 
charged  are  lawful,  and  that  intent  can  make  no  difference. 
But  they  are  bound  together  as  parts  of  a  single  plan.  The 
plan  may  make  the  parts  unlawful."  {Mr.  Justice 
Holmes.)     Swift  v.   U.  S.,  19G  U.  S.  375,  396  (1905); 


136  Manual  of  the  Sherman  Law 

Chattanooga  Foundry  Co.  v.  Atlanta,  203  U.  S.  390,  397 
(1906);  Loewe  v.  Lawlor,  208  U.  S.  274,  298-299  (1908); 
Continental  Wall  Paper  Co.  v.  Voight  &  Sons  Co.,  212  U.  S. 
227,  265  (1909);  Ware-Kramer  Tobacco  Co.  v.  American 
Tobacco  Co.,  180  Fed.  160,  163,  170.  (C.  C— E.  D.  North 
Carolina,  R.  D.  1912.) 

§  288.  Vastness  of  Scheme. 

Where  a  scheme  of  monopoly  is  so  vast  that  it  is  in- 
herently impossible  to  set  forth  the  facts  with  definiteness 
and  precision,  considerable  liberality  is  allowed,  and  if 
the  allegations  are  enough  to  give  the  scheme  a  body  and 
to  result  in  its  accomplishment,  this  is  sufficient.  Sivift  & 
Co.  V.  U.  S.,  196  U.  S.  375,  395-396  (1905.) 

§  289.  Part  of  Unlawful  Plan. 

"In  recent  years,  even  the  fact  that  the  contract  is 
one  for  the  sale  of  property  or  of  business  and  good  will, 
or  for  the  making  of  a  partnership  or  a  corporation,  has 
not  saved  it  from  invalidity  if  it  could  be  shown  that  it 
was  only  part  of  a  plan  to  acquire  all  the  property  used 
in  a  business  by  one  management  with  a  view  to  establish- 
ing a  monopoly."  (Taft,  Circuit  Judge.)  U.  S.  v. 
Addyston  Pipe  &  Steel  Co.,  85  Fed.  271,  291.  (C.  C.  A. 
Sixth  Circuit,  1898),  and  cases  cited. 

"It  is  not  essential  that  these  contracts  considered 
singly  be  unlawful  as  in  restraint  of  trade.  So  consideretl, 
the}'^  may  he  wholly  innocent.  Even  acts  absolutely  lawful 
may  be  steps  in  a  crinlinal  plot  (Aikens  v.  Wisconsin,  195 
U.  S.  194,  206).  But  a  series  of  such  contracts,  if  the 
result  of  a  concerted  plan  or  plot  between  the  defendants, 
to  thereby  secure  control  of  the  sale  of  the  independent 
coal  in  the  markets  of  other  States,  and  there])y  suppress 
competition  in  prices  between  their  own  output  and  that 


Monopoly  Under  the  Act  137 

of  the  independent  operators,  would  come  plainly  within 
the  terms  of  the  statute,  and  as  parts  of  the  scheme  or  plot 
would  be  unlawful."  (Mr.  Justice  Lurton.)  U.  S.  v. 
Reading  Co.,  22G  U.  S.  324,  357-358  (1912). 

§  290.  Even  Competitive  Practices  may  Become  Abnormal 
and  Unlawful. 

"Even  competitive  practices,  of  a  nature  which  as  be- 
tween business  rivals  standing  practically  upon  ecjual  terms 
may  ])e  normal  and  lawful,  yet  when  employed  by  a  power- 
ful monopolistic  comljination  with  the  ability  to  crush,  and 
for  the  purpose  of  crushing,  a  weak  rival,  may  become 
abnormal  and  unlawful."  (Per  Curiam.)  U.  S.  v.  Great 
Lakes  Towing  Co.,  208  Fed.  733,  744.  (D.  C— N.  D.  Ohio, 
E.  D.  1913.) 

§  291.  Lease  in  Pursuance  of  Monopoly. 

A  lease  made  in  pursuance  of  a  scheme  of  monopoly 
which  conveys  all  of  the  property  of  the  lessor  used  in  his 
business  together  with  a  covenant  that  he  will  not  engage 
in  a  similar  business  within  fifty  miles  of  any  plant  operated 
])y  the  lessee,  and  will  assist  in  discouraging  unreasonable 
and  unnecessary  competition  is  void  as  in  restraint  of 
trade  under  both  the  Shei-man  Law  and  the  common  law . 
Shawnee  Compress  Co.  v.  Anderson,  209  U.  S.  423,  431 
et  seq.  (1908). 

§  292.  Monopoly  by  Lessors  or  Vendors. 

"In  United  States  v.  Trans-Missouri  Freight  Ass'n  and 
in  United  States  v.  Joint  Traffic  Ass'n,  supra,  is  found 
language  sustaining  the  inference  that  a  lease  and  sale 
stand  upon  the  same  basis.  It  must  be  conceded  that 
there  is  no  necessary  difTerence  l:)etween  rules  pertaining 
to  sales  and  leases.     It  seems  obvious,  however,  that  a 


138  Manual  of  the  Sherman  Law 

lessor  may  have  a  greater  interest  in  creating  and  main- 
taining a  monopoly  than  a  vendor  from  the  fact  that  on 
the  termination  of  the  lease  the  lessor,  as  the  o'^Tier  of 
boats  suitable  for  the  traffic  in  question,  would  be  in- 
terested in  the  existence  of  as  little  competition  as  pos- 
sible." (Knappen,  Circuit  Judge.)  Darius  Cole  Transp. 
Co.  V.  White  Star  Line,  186  Fed.  63,  67.  (C.  C.  A.  Sbcth 
Circuit,  1911.) 

§  293.  Scheme  of  Monopoly  by  Uniform  Contracts. 

It  is  well  settled  that  a  monopoly  forljidden  by  the  act 
may  be  accomplished  through  a  system  of  uniform  con- 
tracts or  restrictive  agreements  devised  as  part  of  an  illegal 
scheme  to  control  prices  and  to  extinguish  competition. 
U.  S.  V.  Reading  Co.,  226  U.  S.  324  (1912);  Dr.  Miles 
Medical  Co.  v.  Johi  D.  Park  &  Sons  Co.,  220  U.  S.  273 
(1910);  Continental  Wall  Paper  Co.  v.  Voight  &  Sons  Co., 
212  U.  S.  227  (1909);  John  D.  Park  &  So7is  Co.  v.  Hart- 
man,  153  Fed.  24  (C.  C.  A.  Sixth  Circuit,  1907).  For  a 
system  of  uniform  rebate  vouchers,  see  Dennehy  v. 
M'Nulta,  86  Fed.  825.  (C.  C.  A.  Seventh  Circuit,  1898.) 
For  a  system  of  uniform  lease  contracts,  see  Cravens  v. 
Carter-Crume  Co.,  92  Fed.  479.  (C.  C.  A.  Sixth  Circuit, 
1899.) 

§  294,  Effect  of  such  Contracts. 

"Contracts  of  competitors  in  the  production  or  sale  of 
merchantable  commodities  to  deprive  each  competitor  of 
the  right  to  fix  the  prices  of  his  own  goods,  the  terms  of 
the  sale,  the  customers  to  whom  he  shall  dispose  of  them 
and  either  to  fix  these  prices,  terms,  and  customers  by  the 
agreement  of  the  competitors,  or  to  entrust  the  power  to 
dictate  them  to  the  same  man  or  body  of  men — neces- 
sarily have  the  effect  either  to  stifle  competition  entirely 


Monopoly  Under  the  Act  139 

or  to  directly  and  substantially  restrict  it,  because  such 
contracts  deprive  their  rivals  in  trade  of  their  best  means 
of  instituting  and  maintaining  competition  between  them- 
selves." (Sanborn,  Circuit  Judge.)  Whitwell  v.  Con- 
tinental Tobacco  Co.,  125  Fed.  454,  459^60  (C.  C.  A. 
Eighth  Circuit,  1903),  and  cases  cited. 

"The  provision  of  the  contract  here  sought  to  be  en- 
forced is  that  for  ten  years  after  its  termination  every  in- 
vention shall  be  assigned  to  the  plaintiff  savors  of  restraint 
of  trade.  It  projects  itself  so  far  beyond  the  period  of 
actual  employment  and  payment  of  wages,  that  it  ap- 
pears plainly  to  be  in  aid  of  the  unlawful  combination.  It 
would  choke  the  inventive  capacity  of  the  defendant  for  a 
period  so  long  after  his  employment  ceased  that  his  use- 
fulness to  himself  or  any  competitor  would  be  extinguished 
in  most  instances.  When  this  contract  is  multiplied  by 
substantially  all  like  inventors  in  the  country,  its  char- 
acter as  aiding  the  combination  is  too  clear  to  require 
further  discussion.  A  single  contract  for  the  employment 
in  labor  of  one  person  is  far  away  from  interstate  com- 
merce. But  when  it  is  alleged  that  it  is  one  among  others 
with  ninety-five  per  cent  of  all  those  skilled  in  a  particular 
manufacture,  and  that  that  kind  of  manufacture  is  con- 
trolled by  a  coml:)ination  formed  of  many  previously  com- 
l^eting  persons  which  monopolizes  all  or  substantially  all 
interstate  commerce  of  that  kind,  the  single  contract  for 
labor  loses  its  individual  aspect  in  the  larger  relation  it 
bears  to  the  monopoly  in  interstate  commerce.  As  a 
single  incident  it  may  he  harmless.  As  an  integral  part  of 
an  unlawful  scheme  for  monopolizing  commerce  between  the 
States  which  cannot  be  perpetuated  successfully  without  con- 
tracts of  a  similar  tenor  with  all  practising  a  like  craft,  it 
partakes  of  the  illegality  of  the  scheme."  (Rugg,  Chief 
Justice.)     (Italics  mine.)     United  Shoe  Machinery  Co.  v. 


140  Manual  of  the  Sherman  Law 

La  Chapelle,  212  Mass.  467,  485-486.     (Massachusetts 
Supreme  Court,  1912.) 

§  296.  Illegal     Contract    System    of    Contracts    Separately 
Lawful. 

Wliere  the  purpose  of  a  combination  was  the  preven- 
tion or  destruction  of  competition,  and  agreements  are 
entered  into  exactly  adapted  for  this  purpose,  the  plan 
makes  the  parts  unlawful  whatever  may  be  said  of  the 
reasonableness  or  unreasonableness  of  each  or  any  of  the 
several  parts.  U.  S.  v.  Pacific  &  Artie  Co.,  228  U.  S.  87, 
104-105  (1913). 

"In  the  first  place,  we  are  to  consider  that  we  are  not 
here  dealing  with  a  single  contract.  The  complainant 
has  made  a  number  of  them  in  identical  terms.  .  .  .  The 
reasons  which  might  uphold  covenants  restricting  the 
liberty  of  a  single  buyer  might  prove  quite  inadequate 
when  there  are  a  multitude  of  identical  agreements.  The 
single  covenant  might  in  no  way  affect  the  public  interest, 
when  a  large  number  might.  .  .  .  The  general  purpose 
of  each  separate  contract  is  the  regulation  of  the  prices 
and  sales  of  the  line  of  preparations  made  by  complain- 
ant. A  common  purpose  unites  each  covenantee  to  every 
other  and  the  'system'  is  to  be  construed  as  'one  piece,' 
in  which  the  complainant  and  every  assenting  dealer, 
whether  wholesaler  or  retailer,  is  a  party,  and  the  agree- 
ment of  each  such  covenantee  to  sell  only  at  the  prices  dic- 
tated by  the  manufacturer  constitutes  one  general  scheme." 
(LuRTON,  Circuit  Judge.)  John  D.  Park  ti-  Sons  v.  Hart- 
man,  153  Fed.  24,  41.    (C.  C.  A.  Sixth  Circuit,  1907.) 

§  296.  Evil  of  Unification. 

"The  evil  of  unification  lies  in  the  temptation  to  higher 
rates  ant!  lessened  regard  for  the  pu])lic  interests;  and  the 


Monopoly  Under  the  Act  141 

tendency  to  this  evil  result  must  [)e  recognized,  even 
though  not  in  a  given  case  yet  realized  in  actual  experi- 
ence." {Per  Curiam.)  U.  S.  v.  Great  Lakes  Towing  Co., 
208  Fed.  733,  744.    (D.  C— N.  D.  Ohio,  E.  D.  1913.) 

§  297.  Sole  Object  to  Effect  Monopoly. 

"Where  the  sole  object  of  both  parties  in  making  the 
contract  as  expressed  therein  is  merely  to  restrain  com- 
petition, and  enhance  or  maintain  prices,  it  would  seem 
that  there  was  nothing  to  justify  or  excuse  the  restraint, 
that  it  would  necessarily  have  a  tendency  to  monopoly, 
and  therefore  would  be  void."  (Taft,  Circuit  Judge.) 
U.  S.  v.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271,  282-283. 
(C.  C.  A.  Sixth  Circuit,  1898.) 

§  298.  Promise  of  Rebate  for  Exclusive  Trading. 

It  was  early  held  that  "the  promise  of  a  rebate,  as  an 
inducement  for  exclusive  trading,  certainly  does  not  con- 
stitute an  'attempt  to  monopolize'  when  the  purchaser  is 
left  at  liberty  to  buy  where  he  pleases,  and  when  all  other 
sellers  of  the  article  are  left  imrestrained  in  offering  the 
same,  or  greater,  inducements."  (Jackson,  Circuit  Judge.) 
In  re  Greene,  52  Fed.  104,  117.  (C.  C— S.  D.  Ohio,  W.  D. 
1892.) 

Where,  however,  the  giving  of  such  rebates  is  a  general 
practice  carried  out  by  means  of  rel)ate  certificates  of  a 
uniform  character,  in  pursuance  of  a  purpose  to  monop- 
olize the  trade  by  securing  the  exclusive  patronage  of  each 
purchaser,  such  rebates  are  unlawful  and  no  cause  of 
action  can  be  predicated  upon  any  of  said  rebate  certif- 
icates. Dennehy  v.  M'Nulta,  86  Fed.  825,  858  et  seq. 
(C.  C.  A.  Seventh  Circuit,  1898.)  See  also  to  the  same 
general  effect,  Thomsen  v.  Union  Castle  Mail  S.  S.  Co., 
166  Fed.  251,  253.    (C.  C.  A.  Second  Circuit,  1908.) 


142  Manual  of  the  Sherman  Law 

§  299.  Contracts  for  Imparting  Confidential  Communications. 
Contracts  merely  for  the  confidential  communication  of 
collected  facts  which  limit  the  further  divulgence  of  such 
facts  to  other  persons  is  not  a  monopoly  or  restraint  of 
trade  either  under  the  statute  or  at  common  law.  Board  of 
Trade  v.  Christie  Grain  &  Stock  Co.,  198  U.  S.  236,  252 
(1905). 


CHAPTER  XII 


INTENT 


§  300.  General  Allegation. 

Where  allegations  of  intent  are  necessary  in  charging 
conspiracy  to  monopolize  interstate  trade,  a  "general  alle- 
gation of  intent  colors  and  applies  to  all  the  specific 
charges"  set  forth  in  connection  therewith  and  is  all  that 
is  required.    Swift  &  Co.  v.  U.  S.,  196  U.  S.  375,  395  (1905). 

§  301.  Guilty  Knowledge. 

"In  cases  of  conspiracy  it  is  sufficient  if  a  state  of  facts 
be  shown  from  which  the  jury  are  justified  in  drawing  the 
conclusion  that  the  defendants  must  have  known  of  the 
conspiracy."  (Coxe,  Circuit  Judge.)  Lawlor  v.  Loewe, 
209  Fed.  721,  727.    (C.  C.  A.  Second  Circuit,  1913.) 

§  302.  When  Intent  is  Essential. 

Intent  is  almost  essential  to  a  combination  in  restraint 
of  trade  and  is  essential  to  an  attempt  to  monopolize. 
Where  the  monopoly  is  not  actually  accomplished  and  re- 
quires "further  acts  in  addition  to  the  mere  forces  of  na- 
ture to  bring  that  result  to  pass,  an  intent  to  bring  it  to 
pass  is  necessary  in  order  to  produce  a  dangerous  prob- 
ability that  it  will  happen."  (Mr.  Justice  Holmes.) 
Swift  &  Co.  V.  U.  S.,  196  U.  S.  375,  396  (1905). 

§  303.  Where  There  is  only  a  Probability. 

"Of  course,  if  the  necessary  result  is  materially  to  rc- 

143 


144  Manual  of  the  Sherman  Law 

strain  trade  between  the  States,  the  intent  with  which 
the  thing  was  done  is  of  no  consequence.  But  when 
there  is  only  a  probabihty,  the  intent  to  produce  the 
consequences,  may  become  important.  U.  S.  v.  St.  Louis 
Term.  Assoc,  224  U.  S.  383,  394;  Swift  (fc  Co.  v.  U.  S.,  196 
U.  S.  375."  {Mr.  Justice  Lurton.)  U.  S.  v.  Reading  Co., 
226  U.  S.  324,  370  (1912). 

"It  is  not  contended  that  the  unification  of  the  terminal 
facilities  of  a  great  city  where  many  railroad  systems 
center  is,  under  all  circumstances  and  conditions,  a  com- 
Ijination  in  restraint  of  trade  or  commerce.  Whether  it  is 
a  facility  in  aid  of  interstate  conmierce  or  an  unreasonable 
restraint  forbidden  by  the  act  of  Congress,  .  .  .  will  de- 
pend upon  the  intent  to  be  inferred  from  the  extent  of 
the  control  thereby  secured  over  instrumentalities  which 
such  commerce  is  under  compulsion  to  use,  the  method 
by  which  such  control  has  l^een  brought  about  and  the 
manner  in  which  that  control  has  ])een  exerted."  {Mr. 
Justice  Lurton.)  U.  S.  v.  St.  Louis  Terminal,  224  U.  S. 
383,  394-395  (1912). 

§  304.  Coexistence  of  Intent  and  Dangerous  Proba- 
biUty. 

Where  the  intent  and  the  consequent  dangerous  prob- 
ability exist,  the  Sherman  Anti-Trust  Act,  "like  many 
others  and  like  the  common  law  in  some  cases,  directs  itself 
against  that  dangerous  probability  as  well  as  against  the 
completed  result."  {Mr.  Justice  Holmes.)  Sunft  &  Co.  v. 
U.  S.,  196  U.  S.  375,  396  (1895). 

Accordingly  where  acts  are  done  with  an  unlawful  in- 
tent and  an  unlawful  combination  results,  the  offense  is 
committed,  even  though  the  acts  done  were  in  themselves 
perfectly  innocent  and  lawful.  Swift  &  Co.  v.  U.  S.,  169 
U.  S.  375,  396  (1895). 


Intent  145 

§  305.  Doubtful  Cases. 

"Where  a  particular  act,  contract  or  agreement  was  a 
reasonal)le  and  normal  method  in  furtherance  of  trade  and 
commerce  may,  in  doubtful  cases,  turn  upon  the  intent  to 
be  inferred  from  the  extent  of  the  control  thereby  secured 
over  the  commerce  affected,  as  well  as  by  the  method 
which  was  used."  (Mr.  Justice  Lurton.)  U.  S.  v.  Read- 
ing Co.,  226  U.  S.  324,  370  (1912). 

§  306.  When  Purpose  or  Motive  is  Immaterial. 

"Purpose  or  motive  is  of  no  moment  provided  the 
contract  or  agreement  directly  provided  for  the  sup- 
pression of  competition,  or  when  such  a  result  as  a 
matter  of  law  must  necessarily  occur."  (Lurton,  Circuit 
Judge.)  Bigelow  v.  Calumet  &  Hecla  Mining  Co.,  167 
Fed.  721,  728  (C.  C.  A.  Sixth  Circuit,  1909),  and  cases 
cited. 

It  is  immaterial  in  determining  the  legality  of  a  contract 
in  restraint  of  trade,  "whether  or  not  it  was  entered  into 
with  any  evil  intent,  but  the  material  consideration  is  its 
injurious  tendency,  and  the  power  thereby  given  to  con- 
trol prices."  (Pancoast,  Judge.)  Anderson  v.  Shawnee 
Compress  Co.,  87  Pac.  315,  317.  (Oklahoma,  Supreme 
Court,  1906.) 

"If  the  intent  alleged  in  the  bill  were  a  necessary  fact 
to  be  proved  in  order  to  maintain  the  suit,  the  bill  would 
have  to  be  dismissed.  In  the  view  we  have  taken  of  the 
question,  the  intent  alleged  by  the  Government  is  not 
necessary  to  be  proved.  The  question  is  one  of  law  in 
regard  to  the  meaning  and  effect  of  the  agreement  itself, 
namely:  Does  the  agreement  restrain  trade  or  commerce 
in  any  way  so  as  to  be  a  violation  of  the  act?  We  have  no 
doubt  that  it  does."  (Mr.  Justice  Peckham.)  U.  S.  v. 
Freight  Assn.,  166  U.  S.  290,  341  (1897). 


146  Manual  of  the  Sherman  Law 

§  307.  Intent  not  Necessary  Where  Restraint  or  Monopoly  is 
the  Necessary  Result. 

"It  is  not  necessary  to  a  violation  of  the  act  to  show 
affirmatively  a  specific  intent  to  restrain  commerce  or 
create  a  monopoly,  provided  that  such  restraint  or  monop- 
oly be  the  direct,  immediate,  and  necessary  result  of  the 
combination."  (Knappen,  District  Judge.)  Bigelow  v. 
Calumet  &  Hecla  Mining  Co.,  167  Fed.  704,  709  (C.  C— 
W.  D.  Michigan,  N.  D.  1908),  and  cases  cited. 

"For  these  reasons  the  suit  of  the  Government  can  be 
maintained  without  proof  of  the  allegation  that  the  agree- 
ment was  entered  into  for  the  purpose  of  restraining  trade 
or  commerce  or  for  maintaining  rates  above  what  was 
reasonable.  The  necessary  effect  of  the  agreement  is  to 
restrain  trade  or  commerce,  no  matter  what  the  intent 
was  on  the  part  of  those  who  signed  it."  {Mr.  Justice 
Peckham.)  U.  S.  v.  Freight  Assn.,  166  U.  S.  290,  342 
(1897). 

"Where  the  contract  affects  interstate  commerce  only 
incidentally  and  not  directly,  the  fact  that  it  was  not  de- 
signed or  intended  to  affect  such  commerce  is  simply  an 
additional  reason  for  holding  the  contract  valid  and  not 
touched  by  the  act  of  Congress.  Otherwise  the  design 
prompting  the  execution  of  a  contract  pertaining  to  and 
directly  affecting,  and  more  or  less  regulating,  interstate 
commerce  is  of  no  importance."  (Mr.  Justice  Peckham.) 
Addyston  Pipe  &  Steel  Co.  v.  U.  S.,  175  U.  S.  211,  234 
(1899). 

"If  the  necessary,  direct  and  immediate  effect  of  the 
contract  be  to  violate  an  act  of  Congress  and  also  to  re- 
strain and  regulate  interstate  commerce,  it  is  manifestly 
immaterial  whether  the  design  to  so  regulate  was  or  was 
not  in  existence  when  the  contract  was  entered  into.  In 
such  case,  the  design  does  not  constitute  the  material 


Intent  147 

thing.  The  fact  of  a  direct  and  substantial  reguhition  is 
the  important  part  of  the  contract,  and  that  regulation 
existing,  it  is  unimportant  that  it  was  not  designed." 
{Mr.  Justice  Peckham.)  U.  S.  y.  Addyston  Pipe  &  Steel 
Co.,  175  U.  S.  211,  234  (1899). 

''It  is  useless  for  the  defendants  to  say  they  did  not 
intend  to  regulate  or  affect  interstate  commerce.  They 
intended  to  make  the  very  combination  and  agreement 
which  they  in  fact  did  make,  and  they  must  be  held  to 
have  intended  (if  in  such  case  intention  is  of  the  least 
importance)  the  necessary  and  direct  result  of  their  agree- 
ment." {Mr.  Justice  Peckham.)  Addyston  Pipe  &  Steel 
Co.  V.  U.  S.,  175  U.  S.  211,  243  (1899). 

Where  a  combination  of  independent  competitors  is 
such  that  its  operation  and  execution  will  result  in  limiting 
the  supply  controlling  the  price  and  destroying  competi- 
tion in  an  article  of  interstate  commerce,  the  parties  to 
such  combination  will  become  violators  of  the  Act  re- 
gardless of  intent.  O^Halloran  v.  American  Sea  Green 
Slate  Co.,  207  Fed.  187,  191.  (D.  C— N.  D.  New  York, 
1913.) 

"That  there  is  no  allegation  of  a  specific  intent  to  re- 
strain such  trade  or  commerce  does  not  make  against  this 
conclusion,  for,  as  is  shown  by  prior  decisions  of  the  Su- 
preme Court,  the  conspirators  must  be  held  to  have  in- 
tended the  necessary  and  direct  consequences  of  their  acts 
and  cannot  be  heard  to  say  the  contrary.  In  other  words, 
by  purposely  engaging  in  a  conspiracy  which  necessarily 
and  directly  produces  the  result  which  the  statute  is  de- 
signed to  prevent,  they  are,  in  legal  contemplation,  charge- 
able with  intending  that  result.  Addyston  Pipe  &  Steel 
Co.  V.  U.  S.,  175  U.  S.  211,  243;  U.  S.  v.  Reading  Co.,  226 
U.  S.  324,  370."  {Mr.  Justice  Van  Devanter.)  U.  S.  v. 
Patten,  226  U.  S.  525,  543  (1913). 


148  Manual  of  the  Sherman  Law 

§  308.  Where  Result  is  Inconceivable. 

But  wliere  it  is  inconceivable  that  contemplated  acts 
either  taken  alone  or  collectively  could  produce  an  undue 
restraint  or  a  monopoly  forliidden  l)v  the  Act,  no  allega- 
tions of  intent  can  convert  the  proposed  conduct  into  such 
a  crime.  Nash  v.  U.  S.,  229  U.  S.  373,  378  (1913);  U.  S. 
v.  Winslow,  227  U.  S.  202,  218  (1913). 

§  309.  Acts  made  Collectively  Ofifensive  by  Intent. 

While  contemplated  acts  stantling  alone  may  not  each 
constitute  an  offense  if  each  had  been  done,  3''et  where  it 
appears  that  some  of  said  acts  conceivably  might  have 
been  adequate  to  accomplish  an  undue  restraint  or  a 
monopoly,  intent  to  produce  such  result  may  operate  to  con- 
vert what  was  individually  inoffensive  into  what  was  col- 
lectively of  wider  scope  and  prohil^ited  by  the  act.  Nash 
V.  U.  S.,  229  U.  S.  373,  378  (1913),  and  cases  cited. 

§  310.  Presumption  that  Monopolistic  Power  will  be  Exer- 
cised. 

"The  power  to  restrict  competition  in  interstate  and 
international  commerce,  vested  in  a  person  or  an  associa- 
tion of  persons  by  a  contract  or  combination,  is  indicative 
of  its  character;  for  it  is  to  the  interest  of  the  parties  that 
such  a  power  should  be  exercised,  and  the  presumption  is 
that  it  will  be."  (Sanborn,  Circuit  Judge.)  V.  S.  v. 
Standard  Oil  Co.,  173  Fed.  177,  188.  (C.  C— E.  D.  Mis- 
souri, E.  D.  1909.) 

"The  unification  of  power  and  control  over  petroleum 
and  its  products  which  was  the  inevitable  result  of  the 
combining  in  the  New  Jersey  Corporation  by  the  increase 
of  its  stock  and  the  transfer  to  it  of  the  stocks  of  so  many 
other  corporations,  aggregating  so  vast  a  capital,  gives 
rise  in  and  of  itself  in  the  absence  of  countervailing  cir- 


Intent  140 

cumstances,  to  say  the  least,  to  the  prima  facie  presump- 
tion of  intent  and  purpose  to  maintain  the  dominancy  ol" 
the  oil  industry."  {Mr.  Chief  Justice  White.)  Standard 
Oil  Co.  V.  U.  S.,  221  U.  S.  1,  75  (1911);  U.  S.  v.  Great  Lakes 
Towing  Co.,  208  Fed.  733,  742.  (D.  C— N.  D.  Ohio,  E.  D. 
1913.) 

§  311.  Good  Motives. 

The  prohibitions  of  the  act  cannot  "be  evaded  by  good 
motives.  The  law  is  its  own  measure  of  right  and  wrong, 
of  what  it  permits,  or  forbids,  and  the  judgment  of  the 
courts  cannot  be  set  up  against  it  in  a  supposed  accommo- 
dation of  its  policy  with  the  good  intention  of  parties,  and 
it  may  be  of  some  good  results."  (Mr.  Justice  McKenna.) 
Standard  Sanitary  Mfg.  Co.  v.  U.  S.,  226  U.  S.  20,  49 
(1912),  citing  U.  S.  v.  Trans-Missouri  Freight  Asso.,  166 
U.  S.  290;  Armour  Packing  Co.  v.  U.  S.,  209  U.  S.  56,  62. 

§  312.  No  Willful  Purpose. 

It  is  no  defense  that  there  was  no  willful  purpose  or  con- 
scious design  to  violate  the  Act.  Persons  are  presumed  to 
have  intended  the  necessary,  natural  and  known  effects 
or  consequences  of  their  agreements  and  acts,  and  if  these 
effects  or  consequences  be  to  unduly  restrain  interstate 
trade  and  commerce,  then  such  agreements  and  acts  are 
illegal,  and  the  participants  are  chargeable  with  the  con- 
sequences resulting.  O'Halloran  v.  American  Sea  Green 
Slate  Co.,  207  Fed.  187,  189  (D.  C— N.  D.  New  York, 
1913),  and  cases  cited. 

§  313.  Intention  to  Benefit  Public. 

An  honest  intention  on  the  part  of  the  combining  parties 
to  ])enefit  the  general  public  by  cheapening  the  cost  of 
production  and  improving  the  quality  of  the  article  will 


laO  Manual  of  the  Sherman  Law 

not  save  from  the  condenuiation  of  the  statute  a  combina- 
tion which  restrains  interstate  commerce  in  that  article 
to  any  considerable  degree,  and  places  the  power  to  con- 
trol production  and  fix  prices  in  the  hands  of  a  dominating 
corporation  or  of  the  combination  itself.  O'Halloran  v. 
American  Sea  Green  Slate  Co.,  207  Fed.  187,  190.  (D.  C— 
N.  D.  New  York,  1913.) 

§  314.  Intention  to  Aid  the  Financially  Weak. 

An  intent  and  purpose  to  aid  the  financially  weak  pro- 
ducer as  against  the  strong  will  not  save  the  combination 
from  the  condemnation  of  the  statute  Avhere  the  main 
intent  and  purpose  is  to  interfere  with  and  control  produc- 
tion and  prices  in  interstate  commerce.  O'HaUoran  v. 
American  Sea  Green  Slate  Co.,  207  Fed.  187,  190.  (D.  C— 
N.  D.  New  York,  1913.) 

§  315.  Ignorance  or  Mistake  of  Judgment  is  no  Excuse. 

"We  regard  the  cDntention  that  coiui)laiiKmt8  are 
exempt  from  the  doctrine  in  pari  delicto  because  the  par- 
ties acted  in  good  faith  and  without  intention  to  violate 
the  law  as  without  merit.  With  knowledge  of  the  facts 
and  of  the  statute  the  parties  turned  out  to  be  mistaken 
in  supposing  that  the  statute  would  not  be  held  applicable 
to  the  facts.  Neither  can  ))leatl  ignorance  of  the  law  as 
against  the  other."  {Mr.  Chief  Justice  Fuller.)  Harri- 
man  v.  Northern  Securities  Co.,  197  U.  S.  244,  298  (1905). 

"The  law  is  full  of  instances  where  a  man's  fate  depends 
upon  his  estimating  rightly,  that  is,  as  the  jury  subse- 
quently estimates  it,  some  matter  of  degree.  If  his  judg- 
ment is  wrong,  not  only  may  he  incur  a  fine  or  a  short 
imprisonment,  as  here;  he  may  incur  the  i)enalty  of  death." 
{Mr.  Justice  Holmes.)  Nash  v.  U.  S.,  229  U.S.  373,  377 
(1913). 


CHAPTER  XIII 

INDICTMENTS    UNDER   THE   ACT 

§  316.  Constitutionality. 

The  Sherman  Act  is  not  so  indefinite  and  uncertain  as 
to  be  unconstitutional  as  a  criminal  statute.  Nash  v. 
U.  S.,  229  U.  S.  373,  377-378  (1913);  U.  S.  v.  Whiting,  212 
Fed.  466,  471.    (D.  C.  Mass.  1914.) 

§  317.  Proceedings  Before  Grand  Jury. 

"The  grand  jury  is  a  part  of  the  court  in  the  exercise  of 
criminal  jurisdiction,  and  their  proceedings  are  always 
subject  to  the  control  of  the  court.  The  court  can  at  any 
time  direct  the  grand  jury  to  consider  a  particular  accusa- 
tion, or  to  investigate  a  supposed  violation  of  the  criminal 
law.  If  in  the  absence  of  such  instructions  the  grand  jury 
proceeds  of  its  own  motion,  and  is  guilty  of  any  abuse  of 
its  powers,  the  court  can  at  any  time  intervene,  correct  or 
suppress  the  proceedings."  (Wallace,  Circuit  Judge.) 
In  re  Hale,  139  Fed.  496,  500.  (C.  C— S.  D.  New  York, 
1905.) 

Grand  Juries  "cannot  make  inquisitions  into  the  general 
conduct  or  private  business  of  their  fellow  citizens,  and 
hunt  up  offenses  by  sending  for  witnesses  to  investigate 
vague  accusations  founded  upon  suspicions  and  indefinite 
rumors."  (Dick,  District  Judge.)  U.  S.  v.  Kilpatrick,  16 
Fed.  765,  769.    (D.  C— W.  D.  North  Carolina,  1883.) 

The  proceedings  of  the  grand  jury  are  not  open  to 
scrutiny,  and  the  courts  have  never  except  in  sporadic  and 

151 


lo2  Manual  of  the  Sherman  Law 

ill  considered  instances  taken  supervision  over  what  evi- 
dence shall  come  before  its  members.  In  re  Kittle,  180 
Fed.  946,  947.    (C.  C— S.  D.  New  York,  1910.) 

§  318.  Allegations  Under  First  Section. 

"The  offense  under  the  first  section  permits  in  one 
count  an  allegation  of  only  a  single  transaction — that  is, 
an  allegation  of  making  one  contract,  or  engaging  in  one 
combination  or  conspiracy — so  that  while  .  .  .  such  a 
combination  or  conspiracy,  when  once  effected,  may  be 
continuous,  yet  only  one  contract  or  one  conspiracy  can 
properly  be  alleged  in  any  one  count."  (Putnam,  Circuit 
Judge.)  U.  S.  V.  Winslow,  195  Fed.  579,  580.  (D.  C. 
Mass.  1912.) 

§  319.  Allegations  Under  Second  Section. 

"The  second  section  of  the  Act  impliedly  permits  an 
indictment  for  building  up  a  monopoly,  as  well  as  inau- 
gurating or  maintaining  it,  and  therefore  may  relate  to  a 
series  of  acts  following  each  other,  all  covered  into  one 
indictment  or  count,  without  the  indictment  or  count 
being  chargeable  with  duplicity."  (Putnam,  Circuit 
Judge.)  U.  S.  v.  Winslow,  195  Fed.  579,  580.  (D.  C. 
Mass.  1912.) 

§  320.  Reference  to  Other  Counts. 

"Modern  practice  fully  justifies  references  in  the  later 
parts  of  an  indictment  to  earlier  parts  of  the  same  indict- 
ment for  the  details  of  matters  properly  set  out  in  the 
earlier  parts;  .  .  .  but  this  practice  is  subject  to  the  fun- 
damental rules  of  i)leading  that  duplicity  and  repug- 
nancies must  be  avoided."  (Putnam,  Circuit  Judge.) 
U.  S.  V.  Winslow,  195  Fed.  579,  585.  (D.  C.  Mass. 
1912.) 


Indictments  Under  the  Act  153 

§  321.  Must  Appear  that  Restraint  is  Undue  or  Unreasonable. 
It  may  appear  that  the  indictment  "wouitl  liave  been 
good  if  no  question  of  reasonableness  were  open.  .  .  . 
But  under  the  Sherman  Act  that  question  is  open,  and  the 
indictment  must  .  .  .  allege  facts  warranting  a  finding  by 
the  jury  that  the  restraint  was  unreasonable."  Where 
"the  facts  alleged  do  not  justify  such  a  conclusion  ...  no 
crime  is  therefore  charged."  Everything  which  the  "in- 
dictment sets  out  may  be  true,  and  still  the  combination 
or  conspiracy  may  not  have  extended  beyond  what  was 
reasonable,  nor  have  unduly  affected  the  conditions  under 
which  other  persons  engaged  in  that  industry,  either  buy- 
ing or  selling,  did  business."  (Morton,  District  Judge.) 
V.  S.  v.  Whiting,  212  Fed.  466,  479.  (D.  C.  Mass. 
1914.) 

§  322.  No  Right  to  Unrestricted  Competition. 

The  public  has  no  right  to  unrestricted  competition;  it 
must  appear  that  more  has  been  done  than  was  fairly 
justified  by  reasonable  self-protection  and  that  there  has 
been  a  substantial  interference  with  the  interests  of  the 
public  to  its  appreciable  disadvantage.  U.  S.  v.  Whiting, 
212  Fed.  466,  475-476.    (D.  C.  Mass.  1914.) 

§  323.  Doubtful  Grounds  of  Demurrer. 

Where  the  count  of  an  indictment  is  complicated  and 
contains  a  multiplicity  of  allegations  and  it  is  doubtful 
whether  taking  all  such  allegations  to  be  true  that  the 
trial  court  would  decide  for  the  defendant,  a  demurrer  to 
said  indictment  may  be  overruled  without  prejudice  to 
the  defendant  to  later  insist  upon  the  same  defense  at  the 
hearing  on  the  merits.  U.  S.  v.  Winslow,  195  Fed.  579, 
581  (D.  C.  Mass.  1912);  Kansas  v.  Colorado,  185  U.  S. 
125,  144-145  (1902). 


154  Manual  of  the  Sherman  Law 

§  324.  Defects  of  Form. 

"  No  indictment  found  and  presented  by  a  grand  jury  in 
an}^  District  or  Circuit  or  other  court  of  the  United  States 
shall  be  deemed  insufficient,  nor  shall  the  trial,  judgment, 
or  other  proceeding  thereon  be  affected  bj'  reason  of  an}^ 
tlefect  or  imperfection  in  matter  of  form  only,  which  shall 
not  tend  to  the  prejudice  of  the  defendant."  Revised  Stat- 
utes, Sect.  1025;  Tribolet  v.  U.  S.,  95  Pac.  85,  88  (Supreme 
Court,  Arizona,  1908). 

§  325.  Words  of  Statute. 

"An  indictment  framed  under  this  section  (Sect.  2) 
should  contain  a  distinct  averment  in  the  words  of  the 
statute,  that,  by  means  of  the  acts  charged,  the  defendants 
had  monopolized,  or  had  combined  or  conspired  to  monop- 
olize, trade  and  commerce  among  the  several  states  or 
with  foreign  nations."  (Nelson,  District  Judge.)  U.  S. 
V.  Greenhut,  50  Fed.  469,  470.    (D.  C.  Mass.  1892.) 

"It  is  not  sufficient  to  follow  only  the  language  of  the 
statute.  Where  the  act  becomes ,  illegal  and  an  ofTense 
only  from  the  means  used  to  effect  it,  as  in  this  statute,  the 
indictment  must  state,  where  it  is  practicable,  so  much  as 
will  show  its  illegality  and  charge  the  accused  with  a  sub- 
stantial offense."  (Nelson,  District  Judge.)  U.  S.  v. 
Nelson,  52  Fed.  646,  647.    (D.  C.  Minnesota,  1892.) 

"We  regard  it  as  well  settled  by  the  authorities  that  an 
indictment,  following  simply  the  language  of  the  act, 
would  be  wholly  insufficient,  for  the  reason  that  the  words 
of  the  statute  do  not  of  themselves  fully,  directly,  and 
clearly  set  forth  all  the  elements  necessary  to  constitute 
the  offense  intended  to  be  punished."  (Jackson,  Circuit 
Judge.)  In  re  Greene,  52  Fed.  104,  111  (C.  C— S.  D. 
Ohio,  W.  D.  1892),  and  cases  cited. 

"This  statute  is  not  one  of  the  class  where  it  is  always 


Indictments  Under  the  Act  155 

sufficient  to  declare  in  the  words  of  the  enactment,  as  it 
does  not  set  out  all  the  elements  of  a  crime.  ...  If  it  is 
claimed  the  means  are  illegal  enough  must  be  set  out  to 
enable  the  court  to  see  that  they  are  so,  and  to  enable  the 
defense  to  properly  prepare  to  meet  the  charge  made 
against  it."  (Putnam,  Circuit  Judge.)  U.  S.  v.  Patterson, 
55  Fed.  605,  638.    (C.  C.  Mass.  1893.) 

"It  would  not,  I  suppose,  be  enough,  in  an  indictment, 
to  charge  conspiracy  in  restraint  of  trade  in  the  language 
of  the  statute,  but  it  would  be  necessary,  unless  the  pro- 
posed restraint  be  shown  to  be  in  itself  unlawful,  to  allege 
the  illegal  means  intended  to  be  used  in  order  to  effect  the 
restraint."  (Woods,  Circuit  Judge.)  U.  S.  v.  Debs,  64 
Fed.  724,  748.    (C.  C— N.  D.  Illinois,  1894.) 

§  326.  Combination  of  Act  and  Intent. 

"It  is  not  sufficient  to  charge  solely  an  unlawful  intent, 
or  to  aver  merely  that  a  combination  or  a  course  of  busi- 
ness is  in  restraint  of  trade,  or  a  monopoly  of  trade,  in 
order  to  constitute  a  crime.  Acts  relied  upon  to  make  the 
offense  must  be  stated.  A  combination  of  act  and  intent 
is  needed  to  constitute  a  crime.  No  averment  of  intent 
alone  is  sufficient;  neither  is  any  amount  of  act  alone;  the 
two  must  combine."  (Ricks,  District  Judge.)  In  re 
Corning,  51  Fed.  205,  210.  (D.  C— N.  D.  Ohio,  E.  D. 
1892.) 

§  327.  General  Purpose.    Violence  and  Intimidation. 

"Acts  of  violence  and  intimidation  may  be  alleged  as 
means  to  accomplish  the  general  purpose.  Instead  of 
lying  outside  of  the  statute,  they  may  aggravate  the  of- 
fense. They  are  within  the  logic  and  spirit  of  the  statute, 
which  are  not  to  be  defeated  by  distinctions  which  its 
letter  does  not  suggest  to  the  ordinary  mind.    Violence  and 


156  Manual  of  the  Sherman  Law 

intimidation  are  as  much  within  the  mischief  of  the  statute 
as  negotiations,  contracts,  or  purchases.  The  former  are 
often  used  to  compel  the  latter.  This  line  of  reasoning 
applies  to  both  the  first  and  second  sections,  and  finds  a 
sufficient  place  for  every  word  in  each."  (Putnam,  Cir- 
cuit Judge.)  U.  S.  v.  Patterson,  55  Fed.  605,  641.  (C.  C. 
Mass.  1893.) 

§  328.  Facts  Constituting  Offense  must  be  set  Forth. 

"Every  offense  consists  of  certain  acts  done  or  com- 
mitted under  certain  circumstances,  and  in  the  indictment 
for  the  offense  it  is  not  sufficient  to  charge  the  accused 
generally  with  having  committed  the  offense,  but  all  the 
circumstances  constituting  the  offense  must  be  specially 
set  forth."  (Jackson,  Circuit  Judge.)  In  re  Greene,  52 
Fed.  104,  112  (C.  C— S.  D.  Ohio,  W.  D.  1892),  quoting 
from  U.  S.  V.  Cruikshank,  92  U.  S.  542,  563. 

§  329.  Defendant  to  be  Notified  with  Certainty  of  Charge. 

"It  is  a  cardinal  rule  of  criminal  law  that  an  indictment 
is  not  invalid  for  insufficiency  if  it  embraces  the  language 
of  the  statute  and  covers  and  includes  the  essential  in- 
gredients of  the  offense  Avith  sufficient  certainty  to  apprise 
the  defendant  of  the  charge  that  he  will  be  called  upon  to 
meet."  (Hazel,  District  Judge.)  U.  S.  v.  New  Departure 
Mfg.  Co.,  204  Fed.  107,  111  (D.  C— W.  D.  New  York, 
1913),  and  cases  cited. 

"By  the  well-settled  rules  of  ])leMding  it  is  not  sufficient 
to  allege  the  means  in  general  language,  but,  if  it  is  claimed 
that  the  means  used  are  illegal,  enough  must  be  set  out 
to  enable  the  court  to  see  that  they  are  so,  and  to  enable 
the  defense  to  properly  prepare  to  meet  the  charge  made 
against  it."  (Putnam,  Circuit  Judge.)  U.  S.  v.  Patterson, 
55  Fed.  605,  638.    (C.  C.  Mass.  1893.) 


Indictments  Under  the  Act  157 

"An  indictment  is  sufficient  when  it  contains  a  substan- 
tial accusation  of  crime,  and  its  statements  furnish  the 
accused  with  such  a  description  of  the  charge  against  him 
as  will  enable  him  to  make  his  defense,  and  avail  himself 
of  his  conviction  or  acquittal  for  protection  against  further 
prosecution  for  the  same  offense,  and  when  from  it  the 
court  can  determine  that  the  facts  charged  arc  sufficient 
in  law  to  support  a  conviction."  (Carpenter,  District 
Judge.)  U.  S.  v.  Swift,  188  Fed.  92,  100  (D.  C— N.  D. 
Illinois,  E.  D.  1911),  citing  Hume  v.  U.  S.,  US  Fed.  689. 

§  330.  Mere  Allegation  of  Illegality. 

"The  fundamental  rule  ...  is  that  it  is  never  sufficient 
to  allege  that  an  act  is  illegal,  but  the  United  States  must 
allege  something  more  which  the  court  can  see  on  the  face 
of  the  indictment  is  illegal  if  the  facts  are  proven  as  al- 
leged." (Putnam,  Circuit  Judge.)  U.  S.  v.  Winslow,  195 
Fed.  579,  582  (C.  C.  Mass.  1912),  quoting  from  U.  S.  v. 
John  Reardon  &  Sons  Co.,  191  Fed.  454,  456. 

§  331.  All  Necessary  Facts  must  be  Charged. 

"Conspiracy  is  an  offense  which  specifically  demands 
the  application  of  that  wise  and  humane  rule  of  the  com- 
mon law  that  an  indictment  shall  state,  with  as  much  cer- 
tainty as  the  nature  of  the  case  will  admit,  the  facts  w^hich 
constitute  the  crime  intended  to  be  charged.  It  is  never 
enough  that  the  purpose  or  the  means  are  so  described 
that  they  may  he  unlawful.  If  that  is  left  uncertain,  the 
indictment  is  fatally  defective.  It  must  appear  to  the 
court  that,  if  the  facts  alleged  are  proved  as  stated,  without 
any  additional  fact,  or  circumstances,  there  can  be  no 
doubt  of  the  illegality  of  the  conduct  charged,  nor  of  its 
criminality."  (Connor,  District  Judge.)  Ware-Kramer 
Tobacco  Co.  v.  American  Tobacco  Co.,  178  Fed.  Rej).  117. 


158  Manual  of  the  Sherman  \j\\\ 

122  (C.  C— E.  D.  North  Carolina,  1910),  quoting  from 
Commonwealth  v.  Hunt,  4  Met.  Ill,  125,  and  State  v. 
Parker,  43  N.  H.  85. 

§  332.  Result  of  Omitting  Essential  Elements. 

"The  general  rule  in  reference  to  an  indictment  (for 
conspiracy)  is  that  all  the  material  facts  and  circumstances 
embraced  in  the  definition  of  the  offense  must  be  stated, 
and  that,  if  any  essential  element  of  the  crime  is  omitted, 
such  omission  cannot  l)e  supplied  by  intendment  or  im- 
plication. The  charge  must  be  made  directly,  and  not  by 
implication,  or  by  way  of  recital."  (Mr.  Chief  Justice 
Fuller.)  Peitihone  v.  U.  S.,  148  U.  S.  197  (1892);  Ware- 
Kramer  Tobacco  Co.  v.  Amer.  Tobacco  Co.,  178  Fed.  117, 
122.    (C.  C— E.  D.  North  Carolina,  1910.) 

§  333.  Allegation  of  Means. 

It  is  not  necessary  that  an  indictment  should  allege  the 
means  by  which  the  combination  or  conspiracy  was  to  be 
accomplished  if  it  appears  that  the  object  to  be  attained 
is  unlawful.  Tribolet  v.  U.  S.,  11  Ariz.  436,  445;  95  Pac. 
85,  88.    (Supreme  Court,  Arizona,  1908.) 

"The  allegations  of  what  was  done  in  pursuance  of  an 
alleged  conspiracy  are  under  this  particular  statute  irrel- 
evant, and  cannot  be  laid  hold  of  to  enlarge  the  necessary 
allegations  of  the  indictment  and  are  of  no  avail."  (Put- 
nam, Circuit  Judge.)  U.  S.  v.  Patterson,  55  Fed.  605,  639 
(C.  C.  Mass.  1893);  U.  S.  v.  MacAyulreivs  &  Forbes  Co., 
149  Fed.  823,  831  (C.  C— S.  D.  New  York,  1906). 

§  334.  Not  Necessary  to  Prove  Every  Means  Alleged. 

It  may  be  admitted  that  not  each  and  every  means  tend- 
ing to  show  a  conspiracy  are  required  to  be  proved,  where 
sufficient  of  such  means  are  proved  to  establish  the  con- 


Indictments  Under  the  Act  159 

spiracy  charged.    Nash  v.  U.  S.,  229  U.  S.  373,  379-380 
(1913). 

§  335.  Overt  Act. 

No  overt  act  need  be  alleged  in  an  indictment  for  con- 
spiracy under  the  Act.  "The  Sherman  Anti-Trust  Act 
punishes  the  conspiracies  at  which  it  is  aimed  on  the 
common  law  footing,  that  is  to  say,  it  does  not  make  the 
doing  of  an}'^  act  other  than  the  act  of  conspiring  a  condi- 
tion of  liability."  {Mr.  Justice  Holmes.)  Nash  v.  V.  S., 
229  U.  S.  373,  378  (1913);  V.  S.  v.  New  Departure  Mfg. 
Co.,  204  Fed.  107,  111  (D.  C— W.  D.  New  York,  1913), 
and  cases  cited. 

§  336.  Allegation  of  Time. 

Where  the  period  of  operation  of  the  conspiracy  is  def- 
initely set  forth,  the  allegation  of  a  single  precise  date  is 
not  essential  when  the  cooperation  of  the  conspirators  does 
not  rest  alone  upon  a  single  unlawful  agreement,  but  upon 
a  plot  contemplating  a  continuous  result  accomplished  by 
the  continued  cooperation  of  the  conspirators.  U.  S.  v. 
Kissel  &  Harned,  218  U.  S.  601,  607-608  (1910);  U.  S.  v. 
MacAndrews  &  Forbes  Co.,  149  Fed.  823,  830  (C.  C— 
S.  D.  New  York,  1906). 

§  337.  Pleadings  of  Numerous  Documents. 

Whenever  documents  material  to  the  indictment  are  "so 
numerous  that  they  cannot  be  stated  at  length,  or  in  de- 
tail, without  incumbering  the  record  to  an  extent  beyond 
all  practical  rules  of  convenience,  they  may  be  stated  gen- 
erally." (Putnam,  Circuit  Judge.)  U.  S.  v.  Winslow,  195 
Fed.  579,  582.    (D.  C.  Mass.  1912.) 

§  338.  Duplicity. 

"A  combination  in  restraint  of  trade  may  design  to 


100  MaxNual  of  the  Sherman  Law 

accomplish  its  object  in  many  ways,  and  the  enumeration 
of  the  various  means  adopted  does  not  render  the  indict- 
ment bad  for  duplicity.  Duplicity  in  an  indictment  means 
the  charging  of  more  than  one  offense,  not  the  charging 
of  a  single  offense  committed  in  more  than  one  way." 
(Carpenter,  District  Judge.)  U.  S.  v.  Swift,  188  Fed. 
92,  97  (D.  C— N.  D.  Illinois,  E.  D.  1911),  and  cases 
cited. 

§  339.  Label  of  Offense. 

"It  makes  no  difference  what  the  grand  jury  labels  the 
offense.  The  question  is, — do  the  facts  as  stated  amount 
in  law  to  any  offense?  If  the  facts  charged  in  this  indict- 
ment constitute  a  contract,  combination  in  the  form  of 
trust  or  otherwise,  or  a  conspiracy  in  restraint  of  trade  or 
commerce,  it  is  a  valid  indictment."  (Carpenter,  Dis- 
trict Judge.)  U.  S.  v.  Swift,  188  Fed.  92,  98.  (D.  C— N. 
D.  Illinois,  E.  D.  1911.) 

§  340.  Different  Counts  on  Same  Facts. 

All  of  the  counts  of  an  indictment  may  be  based  upon 
the  same  allegations  of  fact,  so  that  it  may  be  asserted  in 
effect  that  the  same  doings,  facts  and  circumstances  con- 
stitute at  once  a  combination,  a  conspiracy,  and  a  monop- 
oly. U.  S.  V.  MacAndrews  &  Forbes  Co.,  149  Fed.  823, 
825.    (C.  C— S.  D.  New  York,  1906.) 

That  in  such  a  case  fines  may  be  imposed  under  each 
count,  see  U.  S.  v.  MacAndrews  &  Forbes  Co.,  149  Fed. 
836,  838.    (C.  C— S.  D.  New  York,  1907.) 

§  341.  Allegations  of  Monopoly. 

An  indictment  under  section  two  of  the  Act  should  al- 
lege "that  liy  means  of  the  acts  charged,  the  defendant 
had  monopolized,  or  attempted  to  monopolize,  or  had 


Indictments  Under  the  Act  "    161 

combined  or  conspired  to  monopolize  trade  and  commerce 
among  the  several  states  or  with  foreign  nations."  (Nel- 
son, District  Judge.)  U.  S.  v.  Greenhut,  50  Fed.  469,  470. 
(D.  C.  Mass.  1892.) 

§  342.  Successful  Results. 

"A  conspiracy  to  monopolize  is  a  conspiracy  to  create 
a  monopoly,  and  unless  it  appears  from  the  indictment 
that  the  conspiracy  in  question,  if  successfully  carried  out, 
would  have  resulted  in  a  monopoly,  no  violation  of  the 
federal  statute  is  charged."  (Noyes,  Circuit  Judge.) 
U.  S.  V.  Patten,  187  Fed.  664,  672.  (C.  C— S.  D.  New 
York,  1911.) 

§  343.  Active  Parties  Principal. 

"All  parties  active  in  promoting  a  misdemeanor,  whether 
agents  or  not,  are  principals."  (Putnam,  Circuit  Judge.) 
V.  S.  V.  Winsloiv,  195  U.  S.  579,  581.    (D.  C.  Mass.  1912.) 

§  344.  Monopoly  by  one  Person  only. 

"Section  2  of  the  Act  undoubtedly  renders  it  possible 
for  one  single  person  to  be  punished  under  this  statute  for 
either  a  monopoly  or  an  attempt  to  monopolize."  (Hough, 
District  Judge.)  U.  S.  v.  MacAndrews  &  Forbes  Co.,  149 
Fed.  823,  836.    (C.  C— S.  D.  New  York,  1906.) 

§  346.  Conspiracy  or  Combination.    One  Party  Defendant. 

An  indictment  does  not  lie  against  one  person  solel}' 
for  conspiracy  or  combination.  "  It  is  difficult  to  imagine 
one  person  combining,  and  obviously  one  person  cannot 
conspire."  (Hough,  District  Judge.)  U.  S.  v.  Mac- 
Andrews  &  Forbes  Co.,  149  Fed.  823,  836.  (C.  C— S.  D. 
New  York,  1906.) 

In  an  action  of  tort  under  Section  7,  however,  one  of  a 


162     *  Manual  of  the  Sherman  Law 

combination  or  an  agreement  in  restraint  of  trade  may  be 
sued  separately,  it  not  l^eing  necessary  to  join  all  parties 
defendant.  City  of  Atlanta  v.  Chatt.  F.  &  P.  Works,  127 
Fed.  23,  26  (C.  C.  A.  Sixth  Circuit,  1903),  and  cases  cited. 

§  346.  Other  Offenses  Indirectly  Connected. 

"It  is  a  fundamental  and  essential  principle  of  law,  and 
of  social  order,  that  all  engaged  in  the  commission  of  a 
particular  crime,  whether  as  counselors,  aiders,  abettors, 
or  otherwise,  are  individually  responsible  criminally  for 
other  offenses  which  result  naturally  from  the  commission 
or  attempt  to  commit  the  crime  intended;  but  as  agree- 
ment and  intent  are  of  the  essence  of  a  conspiracy,  a  con- 
spiracy to  commit  a  particular  offense  can  hardly  be 
deemed  to  include  another  conspiracy  to  commit  another 
offense,  unless  the  latter  was  the  necessary  result  of  the 
commission  or  attempt  to  commit  the  crime  intended, 
or  to  such  a  degree  the  probable  result  that  it  could  itself 
be'  charged  in  the  indictment  to  have  been  intended." 
(Woods,  Circuit  Judge.)  U.  S.  v.  Dehs,  64  Fed.  724,  753. 
(C.  C— N.  D.  Illinois,  1894.) 

§  347.  Summons  to  Defendants  Outside  of  District. 

Where  a  district  court  has  juristliction  of  the  subject- 
matter  or  part  of  the  defendants  residing  within  the  dis- 
trict, the  attendance  of  the  defendants  residing  without 
the  district  may  be  compelled  under  Rev.  St.,  Sect.  716, 
providing  for  the  issuance  of  all  writs  Avhich  are  necessary 
for  the  proper  exercise  of  the  judicial  functions  of  the  court. 
U.  S.  V.  Virginia-Carolina  Chemical  Co.,  163  Fed.  66,  67 
et  seq.     (C.  C— IVI.  D.  Tennessee,  1908.) 

§  348.  Corporation  Party  to  Conspiracy. 

A  corporation  may  be  one  of  the  parties  to  a  conspiracy 


Indictments  Under  the  Act  163 

forbidden  by  the  Act,  there  is  no  more  difficulty  in  im- 
puting to  a  corporation  a  specific  intent  in  criminal  pro- 
ceedings than  in  civil.  U.  S.  v.  MacAndrew^  &  Forbes 
Co.,  149  Fed.  823,  835.  (C.  C— S.  D.  New  York,  1906) 
and  cases  cited. 

§  349.  Corporation  and  Stockholders. 

"The  courts  have  conclusively  presumed  that  the  rela- 
tion between  a  corporation  and  one  of  its  stockholders  is 
not  such  that  the  latter  can  he  held  to  a  criminal  respon- 
sibility for  a  violation  of  the  law  in  which  he  is  not  al- 
leged to  have  personally  participated."  (Hough,  District 
Judge.)  U.  S.  v.  MacAndrews  &  Forbes  Co.,  149  Fed.  823, 
832.  (C.  C— S.  D.  New  York,  1906.)  See  also  Union 
Pacific  Coal  Co.  v.  U.  S.,  173  Fed.  737,  744,  (C.  C.  A. 
Eighth  Circuit,  1909). 

§  350.  Officers  of  a  Corporation. 

"  Neither  in  the  civil  nor  the  criminal  law  can  an  officer 
])rotect  himself  behind  a  corporation  where  he  is  the  ac- 
tual, present  and  efficient  actor."  (Putnam,  Circuit 
Judge.)  U.  S.  v.  Winslow,  195  U.  S.  579,  581.  (D.  C. 
Mass.  1912.) 

§  351.  Instruction  of  Verdict. 

"Unless  there  is  substantial  evidence  of  facts  which  ex- 
clude every  other  hypothesis  but  that  of  guilt,  it  is  the 
duty  of  the  trial  court  to  instruct  the  jury  to  return  a  ver- 
tHct  for  the  accused;  and,  where  all  the  substantial  evi- 
dence is  as  consistent  with  innocence  as  with  guilt,  it  is 
the  duty  of  the  appellate  court  to  reverse  a  judgment  of 
conviction."  (Sanborn,  Circuit  Judge.)  Union  Pacific 
Cool  Co.  V.  U.  S.,  173  Fed.  737,  740.  (C.  C.  A.  Eighth 
Circuit,  1909)  and  cases  cited. 


164  Manual  of  the  Sherman  Law 

§  352.  Construction  of  Indictment  on  Appeal. 

Under  the  Criminal  Appeals  Act  the  limitations  upon 
the  jurisdiction  of  the  Supreme  Court  are  such  that  they 
are  obliged  to  accept  the  construction  of  the  court  below, 
and  have  no  jurisdiction  to  review  the  interpretation  of 
pleadings  so  construed.  U.  S.  v.  Patten,  226  U.  S.  525, 
535  (1913),  and  cases  cited  in  the  foot-note.  U.  S.  v. 
Winslow,  227  U.  S.  202,  216-217  (1913). 

§  353.  Removal  of  Citizen  to  Another  Federal  District. 

Upon  the  application  by  the  district  attorney  for  a 
warrant  for  removal,  "it  is  the  duty  of  the  district  judge 
before  ordering  the  removal  of  a  citizen  to  a  district  court 
for  trial  to  scrutinize  the  indictment,  and  to  refuse  the 
warrant  in  case  it  appears  upon  the  face  of  the  indictment 
either  that  the  crime  alleged  was  not  committed  in  the  dis- 
trict to  which  the  removal  is  asked,  or  that  this  indictment 
does  not  sufficiently  charge  an  offense  under  the  law,  or  for 
other  material  defects  in  that  instrument,  or  in  the  act 
upon  which  it  is  founded."  (Ricks,  DiMrict  Judge.)  In 
re  Corning,  51  Fed.  205,  206.     (D.  C.  Ohio,  E.  D.  1892.) 

"  This  is  a  country  of  vast  extent,  and  it  would  be  a  grave 
abuse  of  the  rights  of  the  citizen,  if,  when  charged  with 
alleged  offenses  committed  perhaps  in  some  place  he  had 
never  visited,  he  were  removed  to  a  district  thousands  of 
miles  from  his  home,  to  answer  to  an  indictment  fatally 
defective,  on  any  mere  theory  of  a  comity  which  would 
require  the  sufficiency  of  the  indictment  to  be  tested  only 
in  the  particular  court  in  which  it  is  pending."  (Lacombe, 
Circuit  Judge.)  In  re  Terrell,  51  Fed.  213,  214.  (C.  C— 
S.  D.  New  York,  1892.) 

"It  is  not  disputed  by  the  district  attorney  that  it  is 
not  only  the  right,  but  the  duty,  of  district  court,  before 
ordering  removal,  to  look  into  the  indictment  so  far  as  to 


Indictments  Under  the  Act  165 

be  satisfied  that  an  offense  against  the  United  States  is 
charged,  and  that  it  is  such  an  offense  as  may  lawfully  be 
tried  in  the  forum  to  which  it  is  claimed  the  accused  should 
be  removed;  and  the  same  right  and  duty  arises  upon 
habeas  corpus,  whether  the  petitioner  is  held  under  the 
warrant  of  removal  issued  by  the  district  judge  whose 
decision  is  thus  reviewed,  or  under  the  warrant  of  the 
commissioner  to  await  the  action  of  the  district  judge." 
(Lacombe,  Circuit  Judge.)  In  re  Terrell,  51  Fed.  213,  214 
(C.  C— S.  D.  New  York,  1892),  and  cases  cited. 


CHAPTER  XIV 

EQUITABLE  PROCEEDING  UNDER  SECTION  FOUR  AND  UNDER 
GENERAL   EQUITY    JURISDICTION 

§  354.  Petition  Under  Anti-Trust  Laws. 

"The  several  circuit  courts  of  the  United  States  are 
hereby  invested  with  jurisdiction  to  prevent  and  restrain 
violations  of  this  act;  and  it  shall  be  the  duty  of  the  several 
district  attorneys  of  the  United  States,  in  their  respective 
districts,  under  the  direction  of  the  Attorney  General,  to 
institute  proceedings  in  equity  to  prevent  and  restrain 
such  violations.  Such  proceedings  may  ])e  by  way  of 
petition  setting  forth  the  case  and  praying  that  such  viola- 
tion shall  be  enjoined  or  otherwise  prohibited.  When  the 
parties  complained  of  shall  have  been  duly  notified  of  such 
petition,  the  court  shall  proceed,  as  soon  as  may  be,  to  the 
hearing  and  determination  of  the  case;  and  pending  such 
petition,  and  before  final  decree,  the  coiu't  may  at  any  time 
make  such  temporary  restraining  order  or  prohibition  as 
shall  be  deemed  just  in  the  premises."  Sherman  Anti- 
Trust  Law  (Act  of  July  2,  1890),  Sect.  4.  Clayton  Act  (Act 
of  October  15,  1914),  Sect.  15,  containing  similar  language. 

§  355.  Circuit  Court  Succeeded  by  District  Court. 

Under  the  Judicial  Code,  in  effect  since  January  1,  1912, 
the  circuit  courts  of  the  United  States  were  abolished,  and 
jurisdiction  of  all  matters  formerly  exercised  by  such  courts 
was  conferred  upon  the  district  courts.  Sections  289,  290, 
Judicial  Code. 

166 


Equitable  Proceeding  167 

Congress  in  enacting  the  Judicial  Code  and  abolishing 
the  Circuit  Courts  did  not  thereby  deprive  a  plaintiff 
under  the  Act  of  the  right  to  sue  the  defendant  in  the 
district  where  he  might  be  found  regardless  of  diversity  of 
citizenship.  Wogan  Bros.  v.  Am.  Sugar  Refining  Co.,  215 
Fed.  273,  274.    (D.  C— E.  D.  Louisiana,  1914.) 

§  356.  Non-Resident  Defendants. 

"Whenever  it  shall  appear  to  the  court  before  which 
any  proceeding  under  section  four  of  this  act  may 
be  pending,  that  the  ends  of  justice  require  that  other 
parties  shall  be  brought  before  the  court,  the  court  may 
cause  them  to  be  summoned,  whether  they  reside  in  the 
district  in  which  the  court  is  held  or  not;  and  subpoenas 
to  that  end  may  be  served  in  any  district  by  the  marshal 
thereof."  Sherman  Anti-Trust  Law  (Act  of  July  2,  1890), 
Sect.  5.     Clayton  Act  (Act  of  October  15,  1914),  Sect.  15. 

§  357.  Where  to  be  Instituted. 

The  Govermnent  may  institute  its  equitable  proceeding 
in  any  district  where  any  one  of  the  resident  defendants 
could  be  found  and  served  with  process;  and  where  the 
complainant  demands  it,  the  court  should  summon  and 
hear  every  interested  party  in  reach  of  its  process  in  or  out 
of  the  district  in  order  that  so  far  as  possible  the  entire 
matter  may  be  adjudicated.  U.  S.  v.  Standard  Oil  Co., 
152  Fed.  290,  296.    (C.  C— E.  D.  Missouri,  E.  D.  1907.) 

As  against  a  corporate  defendant,  the  suit  may  be 
brought  not  only  in  the  judicial  district  whereof  it  is  an 
inhabitant,  but  also  in  any  district  where  it  may  be  found 
or  transacts  business,  and  all  process  in  such  case  may  be 
served  in  the  district  of  which  it  is  an  inhabitant  or  wher- 
ever it  may  be  found.  Clayton  Act  (Act  of  October  15, 
1914),  Sect.  12. 


1G8  Manual  of  the  Sherman  Law 

§  358.  Case  to  be  of  Equitable  Cognizance. 

"The  juriiscliction  in  equity,  though  given  in  broad  and 
general  terms,  will  be  deemed  to  be  limited  so  as  not  to 
extend  to  a  case  which  is  not  of  equitable  cognizance." 
(Woods,  Circuit  Judge.)  V.  S.  v.  Debs,  64  Fed.  724,  753. 
(C.  C— N.  D.  Illinois,  1904.) 

§  359.  Construction  of  Bill  in  Equity. 

"Whatever  may  be  thought  concerning  the  proper  con- 
struction of  the  statute,  a  bill  in  equity  is  not  to  be  read 
and  construed  as  an  indictment  would  have  been  read  and 
construed  a  hundred  years  ago,  but  is  to  be  taken  to  mean 
what  it  fairly  conveys  to  a  dispassionate  reader  by  a  fairly 
exact  use  of  English  speech.  Thus  read  this  bill  seems  to 
us  intended  to  allege  successive  elements  of  a  single  con- 
nected scheme."  (Mr.  Justice  Holmes.)  Siuift  &  Co.  v. 
United  States,  196  U.  S.  375,  395  (1905). 

§  360.  Enjoining  Threatened  Crimes. 

"It  is  a  general  rule  of  equity  jurisprudence  that  courts 
of  chancery  will  not  interpose  where  there  is  an  adequate 
remedy  at  law,  nor  will  they  ordinarily  interpose  to  pre- 
vent the  commission  of  a  crime.  A  well  and  long  estab- 
lished exception  to  this  rule  is  that  where  parties  threaten 
to  commit  a  criminal  offense,  which,  if  executed  against 
private  property,  would  destroy  it,  and  occasion  irrep- 
arable injury  to  the  owner,  and  especially  where  such 
destruction  would  occasion  a  multiplicity  of  suits  to  re- 
dress the  wrong  if  committed,  courts  of  equity  may  inter- 
pose by  injunction  to  restrain  the  threatened  injury." 
(Philips,  District  Judge.)  U.  S.  v.  Elliott,  64  Fed.  27,  31. 
(C.  C— E.  D.  Missouri,  1894.) 

Within  such  excei^tion  also  fall  injunctions  under  Sec- 
tion  4   seeking   to  restrain   the  commission  of   offenses 


Equitaule  Pkocekding  IGO 

prohibited  by  the  Sherman  Anti-Trust  Act  where  such 
offenses  are  hkely  to  affect  the  rights  of  the  pubHc,  it  being 
permissible  to  the  government  representing  the  whole 
people  to  interpose  by  injunction  to  protect  and  preserve 
the  public  welfare  and  well-being.  U.  S.  v.  Elliott,  64 
Fed.  27,  32-34.  (C.  C— E.  D.  Missouri,  1894);  U.  S.  v. 
Dehs,  64  Fed.  724,  753-754.    (C.  C— N.  D.  Illinois,  1894.) 

§  361.  Necessity  of  Alleging  Irreparable  Injury.  Giving  of 
Security. 

It  has  been  said  under  Section  4  of  the  Sherman  Law 
prior  to  the  Clayton  Act  that  it  was  not  necessary  to  jus- 
tify the  court  in  issuing  a  restraining  order,  to  require  an 
allegation  and  showing  of  irreparable  injury  on  the  part 
of  the  government  or  those  for  whose  benefit  it  may  Ije 
assumed  the  action  was  brought;  the  court  being  expressly 
empowered  in  said  section  at  any  time  to  make  such  tem- 
porary restraining  order  or  prohibition  as  shall  be  deemed 
just  in  the  premises.  U.  S.  v.  Coal  Dealers'  Assn.,  85 
Fed.  252,  259  (C.  C— N.  D.  California,  1898),  and  cases 
cited. 

In  private  suits  in  equity,  however,  now  brought  under 
the  Clayton  Act,  a  showing  of  irreparable  injury  is  now 
required  either  by  affidavit  or  verified  bill,  before  a  pre- 
liminary injunction  or  a  temporary  restraining  order  will 
issue.  Whether  such  showing  is  now  required  of  the  gov- 
ernment in  proceedings  under  Section  4  of  the  Sherman 
Law  is  not  clear.  Clayton  Act  (Act  of  October  15,  1914), 
Sects.  16  and  17. 

The  language  of  Section  18  of  the  Clayton  Act  appears 
to  be  broad  enough  to  refer  not  only  to  private  causes  but 
also  to  government  suits,  in  which  view  no  restraining 
order  or  interlocutory  order  of  injunction  could  issue  at 
the  instance  of  the  government  except  upon  the  giving  of 


170  ^Ianual  of  the  Siiekman  Law 

security  by  the  United  States.  But  Section  15  of  the  same 
Act  provides  that  the  Court  may  in  government  proceed- 
ings in  equity  "at  any  time  make  such  temporary  re- 
straining order  or  prohibition  as  shall  be  deemed  just  in 
the  premises,"  nothing  being  said  about  security;  and  it 
would  seem  that  the  application  of  Section  18  should  be 
limited  solelj^  to  private  suits,  since  in  the  absence  of  pre- 
cise language  it  is  contrary  to  the  dignit}'  of  a  sovereign 
power  to  require  it  to  give  security  against  loss  by  the 
exercise  of  its  paramount  authority. 

§  362.  Injunction   not    Void   if   Bill   Contains    a    Technical 
Defect. 

A  mere  defect  that  could  be  reached  by  demurrer  in  a 
bill  over  which  the  court  has  been  given  jurisdiction  by  the 
express  words  of  the  statute  does  not  make  an  injunction 
issued  upon  said  bill  a  nullity  or  permit  it  to  be  violated 
with  impunity.  U.  S.  v.  Agler,  62  Fed.  824,  826.  (C.  C. 
Indiana,  1894.) 

§  363.  Bill  Need  not  State  Statutory  Amount  in  Controversy. 

"The  bill  need  not  state,  in  so  many  words,  that  a  cer- 
tain amount  exceeding  one  thousand  dollars  is  in  contro- 
versy in  order  that  this  Court  (the  Supreme  Court)  may 
have  jurisdiction  on  appeal.  The  statutory  amount  must 
as  a  matter  of  fact  be  in  controversy,  yet  that  fact  may 
appear  by  affidavit  after  the  appeal  is  taken  to  this  Court 
(the  Supreme  Court),  ...  or  in  such  other  manner  as 
shall  establish  it  to  the  satisfaction  of  the  Court."  {Mr. 
Justice  Peckham.)  U.  S.  v.  Freight  Assn.,  166  U.  S.  290, 
310  (1897) 

§  364.  Association  of  Numerous  Offenders. 

"It  is  contended  that,  as  the  Coal  Dealers'  Association 


Equitable  Proceeding  171 

is  an  unincorporated  company,  it  cannot  be  brought  into 
court  by  making  it  a  party  defendant  by  that  name. 
In  equity,  the  action  must  be  against  the  individuals  com- 
prising such  an  association;  but  there  is  this  exception: 
Where  the  parties  are  numerous,  some  of  them  may  be 
brought  in  as  representing  the  whole  association."  (Mor- 
row, Circuit  Judge.)  U.  S.  v.  Coal  Dealers'  Assn.,  85 
Fed.  252,  260.    (C.  C— N.  D.  California,  1898.) 

§  365.  Undecided  Suits  as  a  Cause  of  Action. 

Where  a  plaintiff  has  assigned  all  his  property  used  in 
his  business  to  a  combination  in  restraint  of  trade,  and 
where  actions  have  been  brought  against  him  by  said  com- 
})ination  reple'vying  said  property  and  seeking  damages, 
the  plaintiff  until  the  decision  of  said  actions,  cannot  bring 
and  maintain  suit  under  Section  7,  where  the  only  injuries 
complained  of  are  those  resulting  from  said  actions. 
Bishop  V.  American  Preservers'  Co.,  51  Fed.  272,  273,  274. 
(C.  C— N.  D.  Illinois,  1892.) 

§  366.  Proper  Officers  of  Government  to  Bring  Bill. 

"Congress  has  seen  fit,  on  grounds  of  public  policy,  to 
authorize  the  law  officers  of  the  government  to  appeal  to 
the  courts  of  the  United  States  by  a  bill  in  equity  filed  in 
})ehalf  of  the  people  of  the  United  States,  to  arrest,  by 
writ  of  injunction  or  prohibition,  the  commission  of  acts 
which  are  designed  to  obstruct  the  free  flow  of  commerce 
l)etween  the  states,  and  no  one  can  doubt  the  power  of 
Congress  to  confer  such  authority.  From  the  very  founda- 
tion of  the  government,  it  has  been  accepted  as  a  proposi- 
tion which  admitted  of  no  controversy  that  the  right  to 
regulate  commerce  among  the  several  states,  and  to  pass 
laws  to  protect  commerce  of  that  character,  pertained  to 
the  general  govermnent,  and  that  its  power  in  that  re- 


172  Manual  of  the  Sherman  Law 

spect  was  plenary  and  paramount."  (Thayer,  District 
Judge.)  U.  S.v.  Elliott,  62  Fed.  801,  802.  (C.  C— E.  D. 
Missouri,  E.  D.  1894.) 

§  367.  Private  Person  may  now  Sue  for  Injunctive  Relief 
Except  in  Cases  Against  Common  Carriers. 

It  is  now  provided  by  the  Clayton  Act  that  any  person, 
firm,  corporation,  or  association  shall  be  entitled  to  sue 
for  and  have  injunctive  relief,  in  any  federal  court  having 
jurisdiction  over  the  parties,  against  threatened  loss  or 
damage  by  a  violation  of  the  anti-trust  laws  when  and 
under  the  same  principles  as  injunctive  relief  against 
threatened  conduct  that  will  cause  loss  or  damage  is 
granted  by  courts  of  equity,  under  the  rules  governing 
such  proceedings,  and  upon  the  execution  of  a  proper  bond 
and  showing  that  the  danger  of  irreparable  loss  or  dam- 
age is  immediate,  a  preliminary  injunction  may  issue. 
Equity  suits,  however,  against  common  carriers  subject 
to  the  Interstate  Commerce  Act,  except  on  behalf  of  the 
government,  are  not  authorized.  Clayton  Act  (Act  of 
October  15,  1914),  Sect.  16. 

Prior  to  the  date  of  the  Clayton  Act,  it  was,  however, 
decided  in  a  number  of  cases,  that  except  in  cases  involving 
general  equity  jurisdiction,  a  private  person  had  no  right 
to  bring  a  bill  in  equity  under  the  Sherman  Law,  the  gov- 
ernment at  that  time  being  the  onlj'-  party  who  could  ob- 
tain injunctive  relief  under  its  provisions.  See  Blindell  v. 
Hagan,  54  Fed.  40;  Pidcock  v.  Harrington,  64  Fed.  821; 
Gulf,  C.  &  S.  F.  Ry.  Co.  v.  Miami  S.  D.  Co.,  86  Fed.  407, 
421;  Southern  Ind.  Exp.  Co.  v.  U.  S.  Exp.  Co.,  88  Fed. 
659,  663;  Metcalf  v.  Am.  School  Furniture  Co.,  122  Fed. 
115,  126;  Nat'l  Fireproofing  Co.  v.  Mason  Builders  Assn., 
169  Fed.  259;  Corey  v.  Independent  Ice  Co.,  207  Fed.  459, 
461;  Irving  v.  Neal,  209  Fed.  471,  477. 


Equitable  Proceeding  173 

But  the  present  statute  has  superseded  the  doctrine 
laid  down  in  such  cases. 

§  368.  Statute  of  Limitations  in  Private  Cases. 

Where  criminal  or  equitable  proceedings  are  instituted 
by  federal  authority  under  the  anti-trust  laws,  the  running 
of  the  statute  of  limitations  as  against  each  and  every 
private  right  of  action  involving  the  subject-matter  thereof 
in  whole  or  in  part  is  suspended  during  the  pendency  of 
such  proceedings.  Clayton  Act  (Act  of  October  15,  1914), 
Sect.  5. 

§  369.  Effect  of  Final  Judgment  or  Decree  in  Government 
Proceedings  upon  Private  Suits. 
Except  in  certain  cases  relating  to  consent  judgments 
and  decrees,  a  final  judgment  or  decree  rendered  subse- 
quent to  the  date  of  the  Clayton  Act  in  any  government 
proceeding  under  the  anti-trust  laws  to  the  effect  that 
a  defendant  has  violated  such  laws  shall  be  prima  facie 
evidence  against  such  defendant  in  any  suit  or  proceeding 
by  any  other  party  against  such  defendant  under  said 
laws  as  to  all  matters  respecting  which  said  judgment  or 
decree  would  be  an  estoppel  as  between  the  parties  thereto. 
Clayton  Act  (Act  of  October  15,  1914),  Sect.  5. 

§  370.  Private  Person  may  also  Invoke  General  Equity  Ju- 
risdiction. 
"We  do  not  doubt  the  general  jurisdiction  of  the  circuit 
court  as  a  court  of  equity  to  afford  preventive  relief  in  a 
proper  case  against  threatened  injury  about  to  result  to  an 
individual  from  any  unlawful  agreement,  combination,  or 
conspiracy  in  restraint  of  trade."  (McCormick,  Circuit 
Judge.)  Gulf,  C.  &  S.  F.  Ry.  Co.  v.  Miami  S.  S.  Co.,  86 
Fed.  407,  421  (C.  C.  A.  Fifth  Circuit,  1898) ;  Leonard  v. 
Ahner-Drury  Breuring  Co.,  25  Appeal  (D.  C.)  Cases,  161, 


174  Manual  of  the  Sherman  Law 

176-177  (Court  of  Appeals,  D.  C.  1905);  Bigelow  v. 
Cahimet  &  Hecla  Mining  Co.,  155  Fed.  869,  876-879  (C. 
C— W.  D.  Michigan,  N.  D.  1907);  De  Koven  v.  Lake 
Shore  &  M.  S.  Ry.  Co.,  216  Fed.  955,  957.  (D.  C— S.  D. 
New  York,  1914.) 

"We  concur  in  the  conclusion  reached  by  the  learned 
judge  who  decided  the  case  below,  as  expressed  in  his 
opinion,  and  which  is  made  a  part  of  the  record,  that  the 
jurisdiction  is  maintainal)le  on  general  principles  of  equi- 
table jurisdiction,  and  a  careful  examination  of  the  case 
satisfied  us  that  under  all  the  facts  before  it  there  was  no 
error  in  the  court  awarding  a  preliminarj'  injunction." 
(TouLMiN,  District  Judge.)  Hagen  v.  Blindell,  56  Fed. 
696,  697.  (C.  C.  A.  Fifth  Circuit,  1893.)  Gidf,  C.  &  S. 
F.  Ry.  Co.  V.  Miami  S.  S.  Co.,  86  Fed.  407,  421.  (C.  C. 
A.  Fifth  Circuit,  1898.) 

"There  can  be  equity  jurisdiction  only  when  the  case 
in  question  belongs  to  one  of  the  recognized  classes  of 
cases  over  which  equity  has  jurisdiction.  The  question, 
therefore,  is,  does  this  case  belong  to  one  of  those  recog- 
nized classes?  If  it  does,  it  is  because  the  nature  of  the 
alleged  injury  is  such  that  it  would  be  difficult  to  establish 
in  a  suit  at  law  the  damage  of  the  complainant,  and  be- 
cause to  entertain  it  would  prevent  a  multiplicity  of  suits." 
(Billings,  District  Judge.)  Blindell  v.  Hagan,  54  Fed.  40, 
41-42.    (C.  C— E.  D.  Louisiana,  1893.) 

"When  a  criminal  act  is  threatened,  which  is  liable  to 
occasion  irreparable  injury  to  private  persons,  or  which 
would  give  rise  to  a  multitude  of  suits  at  law  to  redress  the 
wrong,  if  committed,  a  court  of  equity  may  issue  an  in- 
junction, at  the  instance  of  an  individual,  against  parties 
who  threaten  to  commit  the  wrong."  (Thayer,  District 
Judge.)  U.  S.  v.  Elliott,  62  Fed.  801.  (C.  C— E.  D.  Mis- 
souri, E.  D.  1894.) 


Equitable  Proceeding  175 

"'The  foundation  of  this  jurisdiction  of  equity  is  the 
probability  of  irreparable  mischief,  the  inadequacy  of  a 
pecuniary  compensation,  and  the  prevention  of  a  multi- 
plicity of  suits.'  (Laussat's  Notes  to  Fonblanque's 
Equity  at  page  3.)  The  difficulty  has  been  in  applying 
this  principle.  Where  there  is  a  large  combination  of  per- 
sons to  interfere  with  a  party's  business  by  violence,  the 
equity  jurisdiction,  if  maintainable  at  all,  is  maintainable 
on  either  of  two  grounds, — the  nature  of  the  hijury,  in- 
cluding the  difficulty  of  establishing  in  a  suit  at  law  the 
amount  of  actual  damages  suffered,  or  the  prevention  of 
a  multiplicity  of  suits."  (Billings,  District  Judge.) 
BlindeU  v.  Hagan,  54  Fed.  40,  42.  (C.  C— E.  D.  Louis- 
iana, 1893.) 

"So  in  cases  of  trespass,  where  a  business  is  interrupted, 
and  the  profits  of  pending  enterprises  and  voyages  are 
intercepted,  the  party  injured  must  fail  of  recovering  full 
compensation,  for  his  damages  must  at  law  be  largely  con- 
jectural; and  for  this  reason,  as  well  as  to  prevent  a  multi- 
plicity of  suits,  he  may,  by  an  injunction  in  equity,  arrest 
the  threatened  wrongdoing,  and  prevent  the  consequent 
injury,  which  is  irremediable,  because  it  consists  in  the  loss 
of  profits  which  are  not  susceptible  of  proof."  (Billings, 
District  Judge.)  BlindeU  v.  Hagan,  54  Fed.  40,  42-^3. 
(C.  C— E.  D.  Louisiana,  1893.) 

§  371.  Minority  Stockholder. 

"What  I  decide  is  that  an  equity  suit  cannot  be  main- 
tained imder  Section  seven  of  the  Anti-trust  Act  by  a 
single  stockholder  to  recover  threefold  damages  for  in- 
juries sustained  by  his  corporation."  (Coxe,  Circuit 
Judge,  sitting  in  the  District  Court,  quoted  and  affirmed 
by  Circuit  Court  of  Appeals.)  Fleitmann  v.  United  Gas 
Improvement  Co.,  211   Fed.   103,  105  (C.  C.  A.  Second 


176  Manual  of  the  Sherman  Law 

Circuit,  1914);  Post  v.  Bucks  Stove  &  Range  Co.,  200  Fed. 
918,  920  et  seq.    (C.  C.  A.  Eighth  Circuit,  1912.) 

The  reason  of  such  rule  is  that  "an  action  to  recover 
treble  damages  under  section  seven  of  the  act  must  be  an 
action  at  law,  where  the  defendants  have  the  constitu- 
tional right  to  a  jury  trial."  (Per  Curiam.)  Fleitmann  v. 
United  Gas  Improvement  Co.,  211  Fed.  103,  105.  (C.  C.  A. 
Second  Circuit,  1914.) 

"The  right  of  action  created  by  this  section  is  in  the 
corporation  alone  representing  all  its  stockholders." 
(Dodge,  Circuit  Judge.)  Corey  v.  Independent  Ice  Co., 
207  Fed.  459,  460.     (D.  C.  Mass.  1913)  and  cases  cited. 

This  is  true  even  where  demand  has  been  made  upon  the 
directors  or  majority  stockholders  to  bring  such  a  suit 
and  they  have  failed  or  refused  to  do  so.  See  Coi'ey  v. 
Independent  Ice  Co.,  and  Fleitmann  v.  United  Gas  Improve- 
ment Co.,  supra. 

§  372.  Bill  Seeking  Injunction  and  Treble  Damages. 

A  bill  in  equity  under  the  act  seeking  an  injunction  and 
treble  damages  was  held  to  be  multifarious  because  "it 
joins  two  distinct  causes  of  action  not  necessarily  connected 
or  blended,  and  joins  an  action  at  law  with  a  suit  in 
equity.  .  .  .  The  claims  for  damages  under  the  anti-trust 
law  of  July  2,  1890,  and  the  facts  set  forth  upon  which  the 
complainants  ask  that  the  defendant  be  enjoined  from 
using  complainant's  trade-mark  and  trade-name,  con- 
stitute distinct  causes  of  action,  having  no  connection  or 
relation  to  each  other;  and,  besides,  one  is  a  cause  of  ac- 
tion triable  at  law,  while  the  other  is  of  equitable  cog- 
nizance." (Thompson,  District  Judge.)  Block  v.  Stand- 
ard Distilling  Co.,  95  Fed.  978,  979-980.  (C.  C— S.  D. 
Ohio,  W.  D.  1899.) 

So  also  the  inclusion  of  an  individual  claim  for  treble 


Equitable  Proceeding  177 

damages  under  the  fctleral  anti-trust  law  for  injuries  sus- 
tained to  her  business  or  property  in  a  bill  in  equity 
brought  by  a  minority  stockholder  suing  for  herself  and 
several  other  stockholders  and  praying  for  equitable  relief, 
is  multifarious.  Metcalf  v.  Am.  School  Furniture  Co., 
108  Fed.  909,  911-912.  (C.  C— W.  D.  New  York, 
1901.) 

§  373.  Preliminary  Injunction  or  Restraining  Order  With- 
out Notice. 

No  preliminary  injunction  shall  be  issued  without  no- 
tice to  the  opposite  party,  and  no  temporary  restraining 
order  shall  be  granted  Avithout  notice  to  the  opposite  party 
unless  it  shall  clearly  appear  from  specific  facts  shown  by 
affidavit  or  by  the  verified  bill  that  immediate  and  irrep- 
arable injury,  loss  or  damage  will  result  to  the  applicant 
before  notice  can  be  served  and  a  hearing  had  thereon. 
Any  such  order  shall  l^y  its  terms  expire  within  ten  days 
unless  extended  for  good  cause  shown.  When  the  order 
is  granted  without  notice,  the  matter  of  the  issuance  of  a 
preliminary  injunction  shall  be  heard  at  the  earliest  pos- 
sible time  and  shall  take  precedence  of  all  matters  except 
older  matters  of  the  same  nature.  If  the  application  is 
not  then  proceeded  with,  the  restraining  order  shall  be 
dissolved.  Upon  two  days'  notice,  the  opposing  partj^  may 
move  to  dissolve  or  modify  the  order,  and  the  judge  shall 
hear  and  determine  the  motion  as  expeditiously  as  the 
ends  of  justice  require.  Clayton  Act  (Act  of  October  15, 
1914),  Sect.  17. 

Where  the  bare  statements  of  a  government  bill  in 
equity  under  the  Sherman  Law  are  so  general  in  their 
character,  and  quite  too  barren  of  any  averments  of  spe- 
cific facts  to  enable  the  court  to  determine  whether  the 
general  averments  of  fact  are  true,  particularly  in  view  of 


178      JManual  of  the  Sherman  Law 

the  affidavits  of  the  defendants  denying  some  of  the  most 
important  of  them,  and  no  bond  is  given  as  in  case  of  a 
private  suitor,  the  rule  is  to  refuse  the  preliminary  in- 
junction and  abide  the  hearing.  V.  S.  v.  Jellico  Mountain 
Coke  &  Coal  Co.,  43  Fed.  898,  899.  (C.  C— M.  D.  Ten- 
nessee, 1890.) 

§  374.  Relief  Determined  by  Status  at  Date  of  Bill. 

"  I  know  of  no  rule  which  is  better  settled  than  that  the 
question  as  to  the  maintenance  of  a  bill,  and  the  granting 
of  relief  to  a  complainant,  is  to  be  determined  by  the 
status  existing  at  the  time  of  filing  the  bill.  Rights  do  not 
ebb  and  flow.  If  they  are  invaded,  and  recourse  to  courts 
of  justice  is  rendered  necessary,  it  is  no  defense  to  the  in- 
vasion of  a  right,  either  admitted  or  proved,  that  since  the 
institution  of  the  suit  the  invasion  has  ceased.  With  em- 
phasis would  this  be  true  where,  as  here,  the  right  to  in- 
vade is  not  disclaimed."  (Billings,  District  Judge.) 
U.  S.  V.  Workingrnen's  Amalg.  Council,  54  Fed.  994-995, 
996.  (C.  C— E.  D.  Louisiana,  1893.) 

§  375.  Voluntary  Dissolution  does  not  Oust  Jurisdiction. 

"Although  the  general  rule  is  that  equity  docs  not  in- 
terfere simply  to  restrain  a  possible  future  violation  of 
laAV,  yet  where  parties  have  entered  into  an  illegal  agree- 
ment and  are  acting  under  it,  and  there  is  no  adequate 
remedy  at  law  and  the  jurisdiction  of  the  court  has  at- 
tached by  the  filing  of  a  bill  to  restrain  such  or  any  like 
action  under  a  similar  agreement,  and  a  trial  has  been 
had,  and  judgment  entered,  the  appellate  jurisdiction  of 
this  court  is  not  ousted  by  a  simple  dissolution  of  the  as- 
sociation, effected  subsequently  to  the  entry  of  judgment 
in  the  suit."  {Mr.  Justice  Peckham.)  U.  S.  v.  Freight 
Ass7i.,  166  U.  S.  290,  309  (1897). 


EqLiU'ABLW    J'llOCKKOlNG  179 

"If  the  injunction  were  limited  to  the  prevention  of  any 
action  by  the  defendants  under  the  particular  agreement 
set  out,  or  if  the  judgment  were  to  be  limited  to  the  dis- 
solution of  the  association  mentioned  in  the  bill,  the  relief 
obtained  would  be  totally  inadequate  to  the  necessities  of 
the  occasion,  provided  an  agreement  of  that  nature  were 
determined  to  be  illegal.  The  injunction  should  go  fur- 
ther, and  enjoin  defendants  from  entering  into  or  acting 
under  any  similar  agreement  in  the  future.  In  other 
words,  the  relief  granted  should  be  adequate  to  the  occa- 
sion." {Mr.  Justice  Peckham.)  U.  S.  v.  Freight  Assn., 
166  U.  S.  290,  308  (1897). 

§  376.  Court  may  Forbid  Further  Interference  with  Com- 
petition. 

While  the  defendants  cannot  be  ordered  to  compete, 
they  "  properly  can  be  forl^idden  to  give  directions  or  to 
make  agreements  not  to  compete."  The  court  at  least 
may  remove  illegal  barriers  which  will  render  such  com- 
petition impracticable.  Swift  &  Co.  v.  U.  S.,  196  U.  S. 
375,  400  (1905);  U.  S.  v.  Reading  Co.,  226  U.  S.  325,  369- 
370  (1913). 

§  377.  Proper  Measure  of  Relief. 

In  considering  and  determining  the  relief  proper  to  be 
given,  the  action  of  the  court  is  to  be  guided:  (1)  by  "the 
duty  of  giving  complete  and  efficacious  effect"  to  the 
act;  (2)  by  "the  accomplishing  of  this  result  with  as  little 
injury  as  possible  to  the  interest  of  the  general  public," 
and  (3)  by  "a  proper  regard  for  the  vast  interests  of  pri- 
vate property  which  may  have  become  vested  in  many 
persons"  without  "any  guilty  knowledge  or  intent"  on 
their  part.  U.  S.  v.  American  Tobacco  Co.,  221  U.  S.  106, 
185  (1911). 


180  Manual  of  the  Sherman  Law 

§  378.  Case  may  Stand  upon  its  own  Facts. 

Each  case  under  the  Sherman  Act  must  stand  upon  its 
own  facts;  and  methods  adopted  in  other  cases  are  not 
necessarily  to  be  followed  as  precedents,  except  where  the 
same  situation  is  presented.  U.  S.  v.  Union  Pac.  Ry.  Co  , 
226  U.  S.  470,  474  (1913);  U.  S.  v.  Great  Lakes  Towing 
Co.,  217  Fed.  656,  659.    (D.  C— N.  D.  Ohio,  E.  D.  1914.) 

§  379.  Remedying  Results  from  Purely  Administrative  Con- 
ditions. 

"  In  cases  where  the  illegality  of  the  combination  results 
alone  from  purely  administrative  conditions,  which  may 
be  effectivel}'^  eliminated,  a  prohibition  of  the  offending 
practices  ma}^  be  sufficient  to  vindicate  the  statute." 
(Per  Curiam.)  U.  S.  v.  Great  Lakes  Towing  Co.,  208  Fed. 
733,  746.    .(D.  C— N.  D.  Ohio,  1913.) 

§  380.  Where  Result  is  from  both  Monopoly  and  Continued 
Attempted  Monopoly. 

Ordinarily  where  it  is  found  that  acts  have  been  done 
in  violation  of  the  statute,  adequate  measure  of  relief  will 
result  from  the  restraining  of  such  acts  in  the  future;  but 
where  the  condition  which  is  in  violation  of  the  statute 
is  })oth  a  continued  attempt  to  monopolize  and  a  monop- 
olization, broader  and  more  controlling  remedies  are  re- 
(luired.  In  the  latter  case  it  is  essential  not  only  to  forbid 
the  further  commission  of  the  wrongful  acts,  but  also  to 
effectually  dissolve  the  combination  found  to  exist  in 
violation  of  the  statute.  Standard  Oil  Co.  v.  U.  S.,  221 
U.  S.  1,  77-78  (1911). 

The  main  purpose  of  the  Act  is  to  forbid  combinations 
and  conspiracies  in  undue  restraint  of  trade  or  tending  to 
monopolize  it,  and  effectually  to  terminate  their  exist- 
ence.   Property  interests  involved  should  be  conserved  so 


Equitable  Proceeding  181 

far  as  consistent  with  such  purpose,  but  never  in  such  wise 
as  to  sacrifice  the  object  and  purpose  of  the  statute.  U.  S. 
V.  Union  Pac.  Ry.  Co.,  226  U.  S.  470,  476-477  (1912). 

§  381.  Injunction  Preferable  to  Dissolution. 

"While  the  power  (of  the  court)  to  dissolve  an  unlawful 
combination  clearly  exists,  and  should  be  exercised  when 
necessary  to  give  complete  relief,  the  legislative  policy,  as 
disclosed  by  the  terms  of  the  act,  is  clearly  to  resort  to  re- 
straint rather  than  to  dissolution,  except  where  restraint 
alone  is  inadequate."  (Per  Curiam.)  U.  S.  v.  Great  Lakes 
Tomng  Co.,  217  Fed.  656,  658.  (D.  C— N.  D.  Ohio,  E.  D. 
1914.) 

§  382.  Prohibition  Should  not  Extend  to  all  Possible  Viola- 
tions. 
The  continuing  and  threatened  illegal  acts  may  be  for- 
l)idden,  where  they  have  a  direct  and  substantial  effect 
to  restrain  interstate  commerce.  But  the  court  should 
not  prohibit  all  possible  violations  of  the  law.  Past  un- 
lawful competition  does  not  deprive  parties  of  their  right 
to  conduct  lawful  competition.  U.  S.  v.  Standard  Oil  Co., 
173  Fed.  177,  192.    (C.  C— E.  D.  Missouri,  E.  D.  1909.) 

§  383.  Injvinction  Against  Unknown  Defendants. 

"I  think  the  injunction  as  against  unknown  defendants 
is  valid  and  binding  when  the  injunction  order  is  served 
upon  them,  although  the}^  are  not  at  the  time  parties  to 
the  suit.  Indeed,  I  think  an  injunction  that  is  issued 
against  one  man  enjoining  or  restraining  him,  and  all  that 
give  aid  and  comfort  to  him,  or  all  that  aid  and  abet  him,  is 
valid  against  everybody  that  aids  or  gives  countenance  to 
the  man  to  whom  it  is  addressed.  I  do  not  entertain  any 
doubt  about  that."  (Baker,  District  Judge.)  V.  S.  v. 
Agkr,  62  Fed.  824,  827.    (C.  C.  Indiana,  1894  ) 


182  Manual  of  the  Sherman  Law 

§  384,  On  Whom  Injunction  is  Binding. 

"Every  order  of  injunction  or  restraining  order  shall  set 
forth  the  reasons  for  the  issuance  of  the  same,  shall  be 
specific  in  terms,  and  shall  describe  in  reasonal^le  detail, 
and  not  by  reference  to  the  bill  of  complaint  or  other  docu- 
ment, the  act  or  acts  sought  to  be  restrained,  and  shall  be 
binding  only  upon  the  parties  to  the  suit,  their  officers, 
agents,  servants,  employees,  and  attorneys,  or  those  in 
active  concert  or  participating  with  them,  and  who  shall, 
by  personal  service  or  otherwise,  have  received  actual 
notice  of  the  same."  Clayton  Act  (Act  of  October  15, 
1914),  Sect.  19. 

§  385.  Injunctions  Relative  to  Employees  and  Disputes  Con- 
cerning Employment. 

"No  restraining  order  or  injunction  shall  be  granted  by 
any  court  of  the  United  States,  or  a  judge  or  the  judges 
thereof,  in  any  case  between  an  employer  and  employees, 
or  between  employers  and  employees,  or  between  em- 
ployees, or  between  persons  employed  and  persons  seek- 
ing employment,  involving,  or  growing  out  of,  a  dispute 
concerning  terms  or  conditions  of  employment,  unless 
necessary  to  prevent  irreparable  injury  to  property,  or  to 
a  property  right,  of  the  party  making  the  application,  for 
which  injury  there  is  no  adequate  remedy  at  law,  and  such 
l)roperty  and  property  right  must  be  described  with  partic- 
ularity in  the  application,  which  must  be  in  writing  and 
sworn  to  by  the  applicant  or  by  his  agent  or  attorney." 
Clayton  Act    (Act  of  October  15,  1914),  Sect.  20. 

§  386.  Injunctions  Relative  to  Termination  of  Employment, 
Persuasion  of  Others,  Ceasing  to  Patronize,  etc. 

"No  such  restraining  ordcsr  or  injunction  shall  i)rohibit 
any  person  or  persons,  whether  singly  or  in  concert,  from 


Equitable  Pkoceeding  183 

terminating  any  relation  of  employment,  or  from  ceasing 
to  perform  any  work  or  labor,  or  from  recommending,  ad- 
vising, or  persuading  others  by  peaceful  means  so  to  do;  or 
from  attending  to  any  place  where  any  such  person  or  per- 
sons may  lawfully  be,  for  the  purpose  of  peacefully  obtain- 
ing or  communicating  information,  or  from  peacefully  per- 
suading any  person  to  work  or  to  abstain  from  working; 
or  from  ceasing  to  patronize  or  to  employ  any  party  to 
such  dispute,  or  from  recommending,  advising,  or  persuad- 
ing others  by  peaceful  and  lawful  means  so  to  do ;  or  from 
paying  or  giving  to,  or  withholding  from,  any  person  en- 
gaged in  such  dispute,  any  strike  benefits  or  other  monej^s 
or  things  of  value;  or  from  peacefully  assembling  in  a  law- 
ful manner,  and  for  lawful  purposes;  or  from  doing  any  act 
or  thing  which  might  lawfully  be  done  in  the  absence  of 
such  dispute  by  any  party  thereto;  nor  shall  any  of  the 
acts  specified  in  this  paragraph  be  considered  or  held  to  be 
violations  of  any  law  of  the  United  States."  Clayton  Act 
(Act  of  October  15,  1914),  Sect.  20. 

§  387.  Injunctions  Issued  by  Court  Without  Jurisdiction. 

"It  is  well  settled  that  a  restraining  order  or  injunction 
issued  by  a  judicial  tribunal  without  jurisdiction  of  the 
subject-matter  is  coram  non  judice  and  void."  (Baker, 
District  Judge.)  U.  S.  v.  Agler,  62  Fed.  824.  (C.  C. 
Indiana,  1894.) 

§  388.  No  Rule  Requiring  Civil  to  Await  Criminal  Action. 

"An  imperative  rule  that  the  civil  suit  must  await  the 
trial  of  the  criminal  action  might  result  in  injustice  or  take 
from  the  statute  a  great  deal  of  its  power.  Besides  a  suit 
by  the  Govermnent  there  may  be  an  action  for  damages 
by  a  'person  injured  by  reason  of  anything  forbidden  by 
the  Act.'     Must  it  also  wait?  .  .  .  The  most  favorable 


184  Manual  of  the  Shermax  Law 

view  which  can  be  taken  of  the  rights  of  defendants  in  such 
situation  is  that  they  depend  upon  the  discretion  of  the 
court  in  the  particular  case."  {Mr.  Justice  McKenna.) 
Standard  Sanitary  Mfg.  Co.  v.  U.  S.,  226  U.  S.  20,  52 
(1912). 

§  389.  Expediting  Certificate. 

In  an  equity  suit  under  Section  4  of  the  Sherman 
Law,  the  Attorney  General  may  file  a  certificate  that  the 
case  is  of  general  public  importance,  and  thereupon  the 
case  shall  be  given  precedence  over  others  and  in  every 
Avay  expedited  and  early  assigned  for  hearing  before  a 
court  of  three  or  more  judges,  constituted  as  required  by 
the  Act  relative  thereto.  Act  of  June  25,  1910  (36  Stat. 
854). 

Where  such  judges  are  equally  divided  in  opinion  or 
where  the  majority  are  unable  to  agree,  the  Chief  Justice  of 
the  United  States  may  appoint  some  circuit  judge  to  sit 
with  said  judges  upon  a  reargument  and  to  assist  in  deter- 
mining said  cause.    Act  of  June  25,  1910  (36  Stat.  854). 

It  certainly  carmot  be  maintained  that  the  statute  re- 
lating to  filing  of  an  expediting  certificate  is  unconstitu- 
tional. U.  S.  V.  N.  Y.,  N.  H.  &  H.  Ry.  Co.,  165  Fed.  742, 
745.     (C.  C.  Mass.  1908.) 

§  390.  Single  Justice  may  Enter  Decree  on  Mandate. 

Even  where  a  certificate  under  the  expedition  act  was 
filed  in  the  court  below  when  the  action  was  originallj'  in- 
stituted, the  decree  on  the  mandate  of  the  Supreme  Court 
may  nevertheless  be  entered  by  any  district  judge  presid- 
ing, or  the  circuit  judge  assigned  to  the  said  court,  under 
the  provisions  of  section  18  of  the  Judicial  Code.  U.  S. 
v.  Terminal  Assn.  of  St.  Louis,  197  Fed.  446,  447,  450. 
(D.  C— E.  D.  Missouri,  E.  D.  1912.) 


Equitable  Proceeding  185 

§  391.  Appeal  in  Government  Suit  Lies  only  to  Supreme 
Court. 
In  every  suit  in  equity  under  the  federal  anti-trust  acts, 
an  appeal  from  the  final  decree  of  the  district  court  lies 
only  to  the  Supreme  Court,  and  must  be  taken  within 
sixty  days  from  the  entry  thereof.  Ex'pedition  Act,  32  Stat. 
823,  Sect.  2. 


CHAPTER  XV 

ACTION    AT   LAW    UNDER   THE    ANTI-TRUST   LAWS 

§  392.  Statutory  Provisions. 

"Any  person  \\hu  shall  be  injured  in  his  business  or 
property  by  reason  of  anything  forbidden  in  the  anti-trust 
laws  may  use  therefor  in  any  district  court  of  the  United 
States  in  the  district  in  which  the  defendant  resides  or  is 
found  or  has  an  agent,  without  respect  to  the  amount  in 
controversy,  and  shall  recover  threefold  the  damages  by 
him  sustained,  and  the  cost  of  suit,  including  a  reasonable 
attorney's  fee."  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  4.  See  also  The  Sherman  Anti-trust  Law  (Act  of 
July  2,  1890),  Sect.  7. 

§  393.  Constitutionality. 

Congress  had  the  power  to  enact  Section  7  of  the 
Sherman  Anti-Trust  Law  authorizing  recovery  of  treble 
damages  for  injuries  sustained  by  a  private  individual  as 
therein  set  forth.  Chattanooga  Foundry  &  Pipe  Works  v. 
Atlanta,  203  U.  S.  390,  396-397  (1906). 

§  394.  State  Practice  and  Pleading. 

The  action  is  brought  on  the  law  side  of  the  court;  and 
in  conformity  with  the  practice  act,  the  state  practice  and 
pleading  within  which  the  district  court  is  situated  is  fol- 
lowed as  near  as  may  be.  Monarch  Tobacco  Works  v. 
Am.  Tobacco  Co.,  165  Fed.  774,  782.  (C.  C— W.  D.  Ken- 
tucky, 1908.) 

186 


Action  at  Law  Under  Anti-Trust  Laws      187 

While  the  practice  of  the  state  court  is  to  be  followed 
"as  near  as  maj'  be,"  it  is  not  to  be  adhered  to  where  it 
would  be  inconsistent  with  the  terms  or  defeat  the  purposes 
of  the  legislation  of  Congress;  if  the  state  practice  is  not 
adequate  to  afford  the  relief  which  Congress  has  provided 
in  a  given  statute,  resort  must  be  had  to  the  power  of  the 
federal  court  to  adapt  its  practice  and  issue  its  writs  and 
administer  its  remedies  so  as  to  enforce  the  federal  law. 
Buckeye  Powder  Co.  v.  E.  I.  Du  Pont  De  Nemours  P.  Co., 
196  Fed.  514,  516  (D.  C— New  Jersey,  1912),  and  cases 
cited. 

§  395.  Limitation  of  Actions. 

Except  where  a  government  suit  in  equity  or  criminal 
prosecution  is  instituted  under  the  anti-trust  laws,  an 
action  for  damages  under  section  seven  of  the  act  is  sub- 
ject to  the  statute  of  limitations  of  the  state  within  which 
the  federal  district  is  located.  Am.  Tobacco  Co.  v.  People's 
Tobacco  Co.,  204  Fed.  58,  60-61.  (C.  C.  A.— Fifth  Circuit, 
1913.) 

"Whenever  any  suit  or  proceeding  in  equity  or  criminal 
prosecution  is  instituted  by  the  United  States  to  prevent, 
restrain,  or  punish  violations  of  any  of  the  anti-trust  laws, 
the  running  of  the  statute  of  limitations  in  respect  of  each 
antl  every  private  right  of  action  arising  under  said  laws 
and  based  in  whole  or  in  part  on  any  matter  complained 
of  in  said  proceeding  shall  be  suspended  during  the  pend- 
ency thereof."  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  5. 

§  396.  Fictitious  Action. 

"As  a  rule  an  action  at  law  cannot  be  maintained  for 
bringing  even  a  false  and  fictitious  action  against  a  person. 
The  commencement  of  a  suit  at  law  is  an  assertion  of  the 


188  Manual  op  the  Sherman  Law 

right  in  a  manner  provided  by  law,  and  persons  so  com- 
mencing suits  cannot  be  subjected  to  other  actions  or 
penalties  by  reason  of  their  having  done  so,  or  for  assert- 
ing or  prosecuting  what  they  claim  as  a  legal  right.  The 
remedy  of  the  party  so  sued  is  in  defending  the  suit,  and, 
if  he  is  successful  in  his  defense,  he  recovers  costs,  and 
sometimes  damages.  (Blodgett,  District  Judge.)  Bishop 
V.  Americmi  Preservers^  Co.,  51  Fed.  272,  273  (C.  C. — 
N.  D,  Illinois,  1892),  and  cases  cited. 

§  397.  Averments  of  Jurisdiction. 

"The  doctrine  of  the  federal  courts  is  unquestionably 
that  in  matters  of  pleading,  inferences  from  equivocal 
and  uncertain  allegations  cannot  be  followed,  and  that, 
where  the  question  relates  to  jursidiction,  argumentative 
inferences  are  not  sufficient  to  establish  jurisdiction.  The 
averments  must  be  positive;  and  the  court  cannot  retain 
jurisdiction  over  a  doubtful  record  to  say  whether  or  not 
the  intention  was  to  bring  the  case  under  a  specific  act." 
(Hale,  District  Judge.)  Strout  v.  United  Shoe  Machinery 
Co.,  195  Fed.  313,  317.    (D.  C— Mass.  1912.) 

§  398.  "  Where  Defendant  ...  is  Found." 

"It  is  clear  .  .  .  that  for  violations  of  the  Anti-Trust 
Act  the  defendant  may  be  sued  in  any  district  in  which  '  it 
is  found,'  and  that  it  'is  found'  wherever  there  is  some 
agent  or  representative  upon  whom  service  of  process  may 
})e  made."  (Connor,  District  Judge.)  Wore-Kramer 
Tobacco  Co.  v.  Amer.  Tobacco  Co.,  178  Fed.  Rep.  117,  120. 
(C.  C— E.  D.  North  Carolina,  1910.) 

§  399.  In  Business  Within  the  District. 

"It  is  essential,  in  order  to  sui)port  the  jurisdiction  of 
the  court  that  it  shall  appear  somewhere  on  the  record 
either  in  the  application  for  the  \\'rit  or  accompanying  its 


Action  at  Law  Undek  Anti-Tkust  Laws      18'J 

service  or  in  the  pleadings  or  the  findings  of  the  court  that 
the  corporation  is  engaged  in  business  in  the  district." 
(Thompson,  District  Judge.)  Dodson  v.  Farbenfabriken  of 
Elberfield  Co.,  206  Fed.  125,  127.  (D.  C— E.  D.  Pennsyl- 
vania, 1913.) 

§  400.  Defendants  may  be  Sued  Separately. 

"It  is  well  settled  that  the  defendants  may  be  sued 
separately.  'When  several  persons  have  been  jointly  con- 
cerned in  the  commission  of  a  wrongful  act,  they  may 
all  be  charged  jointly  as  principals,  or  the  plaintiff  may 
sue  all  of  them  separately,  torts  being  in  their  nature 
several,  even  when  the  wrongful  act  was  jointly  com- 
mitted. '  "  (Connor,  District  Judge.)  Ware-Kramer  To- 
bacco Co.  V.Am.  Tobacco  Co.,  178  Fed.  117,  121  (C.  C— 
E.  D.  North  Carolina,  1910),  quoting  from  Sessions  v. 
Johnson,  95  U.  S.  347. 

The  act  of  each  of  several  joint  wrongdoers  is  regarded 
as  the  act  of  all,  and  the  acts  of  all  in  consummation  of  a 
common  purpose,  are  regarded  as  the  acts  of  each.'" 
(Conner,  District  Judge.)  Ware-Kramer  Tobacco  Co.  v. 
Amer.  Tobacco  Co.,  178  Fed.  117,  121  (C.  C— E.  D.  North 
Carolina,  1910),  quoting  substantially  from  Powell  v. 
Thompson,  80  Ala.  51,  56  (Ala.  Supreme  Court,  1885). 

§  401.  One  Defendant  Itself  a  Combination. 

"  It  is  uniformly  held  that,  in  order  to  recover,  the  plain- 
tiff must  allege  that  the  defendants  have  formed  a  con- 
spiracy, or  combination,  in  restraint  of  trade,  or,  if  there 
be  but  one  defendant  whose  acts  are  made  the  basis  of  the 
action,  that  it  is  of  itself  such  a  combination,  within  the 
purview  of  the  act."  (Connor,  District  Judge.)  Ware- 
KraTner  Tobacco  Co.  v.  Amer.  Tobacco  Co.,  178  Fed.  117, 
123.    (C.  C.  — E.  D.  North  Carolina,  1910.) 


190  Manual  of  the  Sherman  La'vV 

§  402.  Corporation  Cannot  Escape  Because  Sole  Defendant. 

A  corporation  wliich  has  been  a  in(>mb(M-  of  an  uiihiwful 
combination  cannot  escape  because  it  is  the  sole  defend- 
ant. If  the  agreement  between  such  corporation  and  its 
associates  was  unlawful  and  tortious,  each  is  responsible 
for  the  torts  committed  in  the  course  of  the  illegal  com- 
bination, and  has  no  ground  to  complain  that  it  alone  has 
been  sued.  City  of  Atlanta  v.  Chattanooga,  F.  &  P.  Works, 
127  Fed.  23,  26.     (C.  C.  A.  Sixth  Circuit,  1903). 

§  403.  Single  Defendant  Under  Section  Two. 

Under  the  Second  Section,  it  is  clear  that  by  the  word 
])erson  is  designated  a  corporation  as  well  as  an  individual, 
and  that  one  person  or  one  corporation  may  be  liable  for 
monopolizing  or  attempting  to  monopolize,  and  may  be 
sued  as  sole  offender.  V.  S.  v.  MacAndrews  &  Forbes  Co., 
149  Fed.  823,  836  (C.  C— S.  D.  New  York,  1906);  U.  S. 
V.  Standard  Oil  Co.,  173  Fed.  177,  195  (C.  C— E.  D. 
Missouri,  E.  D.  1909);  Standard  Oil  Co.  v.  U.  S.,  221 
U.S.  1,61  (1911). 

§  404.  Cases  Against  Single  Defendant. 

For  cases  brought  under  section  seven  of  the  Sher- 
man liaw  against  a  single  defendant,  among  others,  see 
alley  V.  United  Shoe  Machinery  Co.,  202  Fed.  598  (D.  C. 
Mass.  1913);  Meeker  v.  Lehigh  Valley  U.  Co.,  183  Fed. 
548  (C.  C.  A.  Second  Circuit,  1910);  Wheeler-Ste7izd 
Co.  V.  Nafl  Window  Glass  Jobbers  Ass'n,  152  Fed.  864. 
(C.  C.  A.  Third  Circuit,  1907.) 

§  405.  Stockholder  Cannot  sue  for  Injuries  Sustained  by  his 
Company. 
Where  a  stockholder  has  received  no  injuries  to  his 
l)usiness  or  property,  other  than  such  as  he  may  sufTer  in 


Action  at  Law  Under  Anti-Truht  Laws      191 

common  with  all  the  other  stockholders  of  his  corpora- 
tion by  reason  of  injuries  to  its  business  or  property  in 
violation  of  the  act,  such  stockholder  has  no  individual 
right  of  action  under  the  act  conferred  on  him  for  the  re- 
covery of  threefold  damages  for  injuries  by  him  sustained; 
any  such  asserted  right  on  the  part  of  the  stockholder 
being  inconsistent  with  the  right  of  the  corporation  to 
maintain  suit  upon  the  same  cause  of  action.  Ames  v. 
Am.  Tel.  &  Tel.  Co.,  166  Fed.  820,  822-824  (C.  C.  Mass. 
1909) ;  Post  V.  Bucks  Stove  &  Range  Co.,  200  Fed.  918, 
919-920  (C.  C.  A.  Eighth  Circuit,  1912);  Corey  v. 
Bosto7i  Ice  Co.,  207  Fed.  465,  466  (D.  C.  Mass.,  1913); 
Fleitman  v.  U.  S.  Gas  Improvernent  Co.,  211  Fed.  103,  104- 
105  (C.  C.  A.  Second  Circuit,  1914);  Loeh  v.  Eastman 
Kodak  Co.,  183  Fed.  704,  709-710.  (C.  C.  A.  Third  Cir- 
cuit, 1910.) 

§  406.  Sovereign  State  Cannot  be  a  Party. 

A  sovereign  state  cannot  be  made  a  party  to  an  action 
at  law  brought  under  Section  7  of  the  Act.  Upon 
principle  and  authority,  such  state  is  entitled  to  immunity 
from  any  investigation  of  its  sovereign  acts  by  the  federal 
courts.  Am.  Baiiana  Co.  v.  United  Fruit  Co.,  166  Fed. 
261,  266  (C.  C.  A.  Second  Circuit,  1908);  Lowenstein 
V.  Evans,  69  Fed.  908,  911.  (C.  C.  South  Carolina, 
1895.) 

§  407.  Defendants  Need  not  Necessarily  be  Engaged  in  In- 
terstate Commerce. 
It  is  not  necessary  that  it  should  be  shown  that  the  de- 
fendants were  themselves  engaged  in  interstate  commerce, 
where  in  fact  they  by  an  illegal  combination  prevented 
interstate  transportation  of  the  plaintiff's  goods.  Loewe 
V.  Lawlor,  208  U.  S.  274.  301  (1908). 


192  Manual  of  thk  Sherman  Law 

§  408.  Not  Essential  that  Plaintifif  be  Engaged  in  Interstate 
Commerce. 

Where  a  plaintiff  actually  sustains  injuries  wholly 
within  a  state  by  reason  of  a  combination  or  agreement 
in  restraint  of  interstate  trade,  he  may  nevertheless  re- 
cover damages  notwithstanding  he  is  not  himself  engaged 
in  interstate  commerce.  The  act  gives  a  compensatory 
remedy  to  any  person  directly  affected  l^y  the  combination 
or  alleged  agreement.  Chattanooga  Foundry  &  Pipe  Works 
v.  Atlanta,  203  U.  S.  390,  397  (1906);  City  of  Atlanta  v. 
Chattanooga  F.  &  P.  Works,  127  Fed.  23,  27-28.  (C.  C.  A. 
Sixth  Circuit,  1903.) 

Where,  however,  it  appears  that  the  only  interstate  ac- 
tivities of  either  the  plaintiff  or  defendant  concern  man- 
ufacturing merely,  no  action  can  be  maintained.  "A  cor- 
poration may  have  an  operating  manufactory,  in  every 
state  of  the  union  and  yet  not  be  engaged  in  interstate 
commerce."  (Coxe,  District  Judge.)  Dueber  Watch  Case 
Mfg.  Co.  V.  Hoivard  Watch  Co.,  55  Fed.  851,  853  (C.  C.~ 
S.  D.  New  York,  1893);  U.  S.  v.  E.  C.  Knight  Co.,  156 
U.  S.  1,  12  (1895). 

§  409.  Right  of  Receiver  to  Sue. 

While  a  mere  chancery  receiver,  having  no  title  to  the 
assets  or  to  the  claim  sued  upon,  cannot  maintain  an 
action  in  the  federal  courts  under  section  seven  in  a  juris- 
diction other  than  that  in  which  he  was  appointed,  still  a 
receiver  who  is  a  true  successor  in  title  has  the  right  to  sue 
anywhere.  Str-out  v.  United  Shoe  Mach.  Co.,  195  Fed.  313, 
319  et  seq.    (D.  C.  Mass.  1912.) 

§  410.  Section  Seven  Declaratory  of  Common-Law  Right  of 
Action. 

"Section  7  of  the  federal  act  of  1890  is  declaratory  of  a 


Action  at  Law  Under  Anti-Tullst  Laws      193 

common-law  right  which  existed  in  favor  of  parties  in- 
jured b}'  wrongs  enumerated  in  other  sections  of  that  act, 
and  confers  jurisdiction  to  seek  a  remedy,  and  with  treble 
damages,  in  a  federal  tribunal.  The  character  of  the 
right  of  action  is  in  no  way  changed,  and  still  remains  one 
in  tort."  (Hazel,  District  Judge.)  Metcalf  v.  Am.  School 
Furniture  Co.,  108  Fed.  909,  912  (C.  C— W.  D.  New 
York,  1901),  and  cases  cited. 

§  411.  Action  not  Penal  but  Remedial. 

" The  remedy  is  not  given  to  the  public"  but  to  private 
persons.  "It  is  not  reasonable  to  construe  the  remedy 
so  conferred  as  a  penal  action,  for  that  would  be  to  add  to 
the  punishment  by  fine  or  imprisonment  imposed  by  the 
other  sections  of  the  act  an  additional  punishment  by  way 
of  pecuniary  penalty.  The  plain  intent  is  to  compensate 
the  person  injured.  True,  the  compensation  is  to  be  three 
times  the  damage  sustained.  But  this  enlargement  of  com- 
pensation is  not  enough  to  constitute  the  action  a  penal 
action."  (Lurton,  Circuit  Judge.)  City  of  Atlanta  v. 
Chattanooga  F.  &  P.  Works,  127  Fed.  23,  28-29  (C.  C.  A. 
Sixth  Circuit,  1903);  City  of  Atlanta  v.  Chattanooga  F.  & 
P.  Co.,  101  Fed.  900,  904.  (C.  C— E.  D.  Tennessee, 
S.  D.  1900.) 

Mr.  Justice  Holmes  is  apparently  in  accord.  See  same 
case  in  Supreme  Ct.,  203  U.  S.  390,  397  (1906),  citing 
Huntington  v.  Attrill,  146  U.  S.  657,  668;  Brady  v.  Daly, 
175  U.  S.  148,  155,  156.  See  also  Strout  v.  United  Shoe 
Mach.  Co.,  195  Fed.  313,  317  (D.  C.  Mass.  1912) ;  Monarch 
Tobacco  Works  v.  American  Tobacco  Co.,  165  Fed.  774, 
779.    (C.  C— W.  D.  Kentucky,  1908.) 

§  412.  Cause  of  Action  Complete  at  Date  of  Suit. 
The  cause  of  action  under  section  seven  is  tortious  and 


194  Manual  of  the  Sherman  Law 

must  be  complete  at  the  time  the  suit  is  l)rought.  Until 
the  wrong  is  done  and  the  injury  suffered,  there  is  no  cause 
of  action  under  this  section.  Threatened  wrong  and  ap- 
prehended loss  are  not  within  its  provisions.  The  action 
cannot  be  maintained  if  the  allegations  of  the  plaintiff  do 
not  show  at  the  time  the  action  was  begun  that  the  de- 
fendant had  done  any  act  in  violation  of  the  Statute. 
Locker  v.  American  Tobacco  Co.,  197  Fed.  495,  496.  (D. 
C— S.  D.  New  York,  1912.) 

§  413.  Words  of  Statute. 

"Under  the  act  of  July  2,  1890,  it  is  not  sufficient  to 
frame  the  declaration  in  the  words  of  the  statute.  The 
statute  does  not  set  forth  the  elements  of  the  offenses  which 
are  forbidden;  and,  further,  there  may  be  contracts  in  re- 
straint of  trade  between  the  states  or  with  foreign  coun- 
tries, and  attempts  to  monopolize  such  trade  or  commerce 
which  are  not  within  the  statute.  These  circumstances 
made  it  imperative  that  the  substance  of  the  contracts 
in  restraint  of  trade,  or  the  substantial  facts  which  con- 
stitute the  attempt  to  monopolize,  should  be  set  forth  in 
the  declaration."  (Colt,  Circuit  Judge.)  Cilley  v.  United 
Shoe  Mach.  Co.,  152  Fed.  726,  728-729  (C.  C.  Mass.  1907); 
Ware-Kramer  Tobacco  Co.,  v.  Ajfier.  Tobacco  Co.,  178 
Fed.  117,  123.     (C.  C— E.  D.  North  Carolina,  1910.) 

§  414.  Action  need  not  be  Labelled. 

Where  the  averments  are  such  as  to  show  unequivo- 
cally that  the  action  is  brought  under  section  seven,  it  is 
unnecessary  to  label  the  action  as  having  been  so  brought. 
Stroui  V.  United  Shoe  Machinery  Co.,  195  Fed.  313,  317. 
(D.  C.  Mass.  1912.) 

§  415.  Satisfaction  of  Defendant. 

It  is  not  one  of  the  functions  of  the  court  to  compel  a 


Action  at  Law  Under  Anti-Trust  Laws      195 

phiintiff  to  state  his  case  in  the  way  most  satisfactory  to 
the  defendant  where  a  close  scrutiny  of  the  complaint  dis- 
closes nothing  obviously  wrong.  Loewe  v.  Lawlor,  142 
Fed.  216,  217.    (C.  C.  Connecticut,  1915.) 

§  416.  Reasonable  Certainty. 

"In  the  pleading,  plaintiff  must  declare  the  forbidden 
acts  and  consequent  injuries  in  such  clear  and  unambigu- 
ous language,  and  with  such  reasonable  certainty,  that  the 
defendants  and  the  court  may  be  apprised  of  the  alleged 
cause  of  action,  that  it  may  be  known  by  the  former  how 
to  answer  and  prepare  for  trial,  and  by  the  latter  what  is 
the  nature  of  the  issue,  and,  if  it  be  one  of  fact,  to  control 
the  character  of  the  proofs  otTered  at  the  trial,  and  to  pro- 
nounce and  enforce  a  judgment  that  will  settle  the  rights 
involved  in  such  issues."  (Rellstab,  District  Judge.) 
Buckeye  Powder  Co.  v.  E.  I.  Du  Pont  De  Nemours  P.  Co., 
196  Fed.  514,  517.    (D.  C.  New  Jersey,  1912.) 

§  417.  Scope  of  Plaintiff's  Allegations. 

The  plaintiff  "is  not  required  to  allege  more  than  is 
necessary  to  l)e  proven,  nor  is  he  to  be  unduly  limited  in 
making  his  allegations  of  steps  taken  because  at  the  time 
of  making  them  he  is  not  in  possession  of  the  specific  data 
which  at  the  trial  he  Avill  find  necessary  to  establish  such 
step,  unless  such  step  or  steps  by  the  very  framework  of 
his  pleadings  are  essential  to  his  cause  of  action,  and  it  is 
apparent  that  without  more  definite  data  the  defendant 
will  be  prejudiced  in  his  defense  in  meeting  such  allega- 
tions." (Rellstab,  District  Judge.)  Buckeye  Powder  Co. 
V.  E.  I.  Du  Pont  De  Nemours  P.  Co.,  196  Fed.  514,  522. 
(D.  C.  New  Jersey,  1912.) 

The  plaintiff  is  not  to  be  unduly  limited  in  the  allega- 
tions of  his  declaration.     "To  insist  that  the  plaintiff  in- 


I'JG  INIanuaiv  of  the  Sherman  Law 

sert  in  his  declaration  only  such  steps  as  would  be  suffi- 
cient to  maintain  his  action  would  be  to  unduly  limit  and 
skeletonize  his  pleading,  a  course  apt  to  prove  embarrass- 
ing, if  not  disastrous,  at  the  trial,  where  the  range  of  evi- 
dence may  be  limited  l>y  the  paucity  of  the  allegations, 
and  one  which  would  be  antagonistic  to,  rather  than  co- 
operative with  the  legislative  purpose  manifested  in  the 
Anti-trust  Act."  (Rellstab,  District  Jud(^e.)  Buckeye 
Powder  Co.  v.  E.  I.  Du  Pont  De  A'emours  P.  Co.,  19G  Fed. 
514,  522.    (D.  C.  New  Jersey,  1912.) 

§  418.  Vagueness  and  Uncertainty. 

A  declaration  under  the  Sherman  Lrav  is  insufficient 
where  it  is  so  uncertain,  vague  and  indefinite  that  the  de- 
fendant is  unable  to  know  of  what  it  is  accused  and  to 
properly  prepare  its  defense,  or  where  the  court  is  unable 
to  determine  Avhether  the  alleged  offenses  are  within  the 
statute,  alley  v.  United  Shoe  Mach.  Co.,  152  Fed.  726, 
728.    (C.  C.  Mass.  1907.) 

§  419.  Repression  of  Evil  and  Advancement  of  Remedy. 

"The  manifest  tendency"  of  the  federal  courts  is  "to 
apply  to  the  act  the  fundamental  rule  of  construction 
which  requires  the  court  to  so  interpret  the  statute  that 
they  repress  the  evil  and  advance  the  remedy.  The  evil 
at  which  this  statute  is  aimed  is  of  national  importance, 
and  the  remedies  provided  for  its  punishment  and  lepres- 
sion  should  not  be  restricted  by  technical  and  narrow  rules 
of  pleading.  If  the  plaintiff  iji  an  intelligent  way  and  by 
'a  connected  stoiy'  sets  forth  his  grievance,  he  should  not 
be  turned  away  from  the  court  or  his  pleading  so  mutilated 
by  striking  out  more  or  less  essential  averments,  as  to 
embarrass  him  and  unduly  limit  the  scope  of  his  proof 
when   he   comes   to   trial."      (Conner,   District  Judge.) 


Action  at  Law  Under  Anti-Thust  Laws      197 

Ware-Kramer  Tobacco  Co.  v.  Am.  Tobacco  Co.,  178  Fed. 
117,  125.    (C.  C— E.  D.  North  Carolina,  1910.) 

§  420.  Strict  Technical  Rules  of  Pleading. 

"The  strict  teehiiiL-al  rules  of  pleading,  the  enforcement 
of  which  so  often  delayed  and  frequent!}^  defeated  justice, 
have  been  abrogated  by  modern  codes,  or  rules  of  the 
court."  (Conner,  District  Judge.)  Ware-Kramer  To- 
bacco Co.  V.  Am.  Tobacco  Co.,  178  Fed.  117,  122.  (C.  C— 
E.  D.  North  Carolina,  1910.) 

§  421.  Greater  Liberality  than  at  Common  Law. 

Greater  liberality  is  permitted  the  pleader  who  founds 
liis  cause  of  action  upon  the  Anti-Trust  Act  in  the  form  of 
stating  the  several  steps  which  in  liis  judgment  bring 
his  cause  of  action  within  the  purview  of  such  act, 
than  was  permitted  by  rules  governing  pleadings  at 
common  law.  Buckeye  Powder  Co.  v.  E.  I.  Du  Pont  De 
Nemmrs  P.  Co.,  196  Fed.  514,  521.  (D.  C.  New  Jersey, 
1912.) 

"To  require  the  party  injured  by  the  conspiracy  de- 
nounced by  the  Anti-Trust  Act  to  set  out  his  cause  of 
complaint  with  that  degree  of  nicety  and  precision  in 
stating  times,  places,  methods  and  persons,  as  is  required 
in  the  ordinary  common-law  pleading  would  be  to  nullify 
the  beneficent  purpose  of  the  statute.  If  the  pleader  sets 
out  with  reasonable  certainty  and  definiteness,  the  causes 
which  resulted  in  his  injury,  and  connects  the  defendant 
therewith,  and  from  such  allegations  the  defendant  is  ap- 
prised of  the  character  of  the  accusation,  and  it  is  not 
apparent  that  he  will  be  prejudiced,"  it  is  sufficient. 
(Rellstab,  District  Judge.)  Buckeye  Powder  Co.  v.  E.  I. 
Du  Pont  De  Nemours  P.  Co.,  196  Fed.  514,  522.  (D.  C. 
New  Jersey,  1912.) 


198  Manual  of  the  Sherman  Law 

§  422.  Fullness  and  Particularity  of  an  Indictment  not  Re- 
quired. 

It  is  n(jt  necessary  in  the  pleading  in  a  civil  action  to 
state  the  facts  showing  a  right  of  action  with  all  the  full- 
ness and  particularity  required  in  an  indictment  charging 
a  criminal  offense.  All  that  is  necessary  is  to  follow  the 
rules  of  civil  pleadings  generally  followed  in  the  jurisdic- 
tion where  the  suit  is  brought.  Monarch  Tobacco  Works 
V.  Am.  Tobacco  Co.,  165  Fed.  774,  779.  (C.  C— W.  D. 
Kentucky,  1908.) 

Civil  pleadings  under  the  act  are  not  to  be  read  and 
construed  as  an  indictment  would  have  been  read  and 
construed  a  hundred  years  ago,  but  the  allegations  are  to 
])e  taken  to  mean  what  a  perusal  thereof  fairly  conveys  to 
a  dispassionate  reader  by  a  fairly  exact  use  of  English 
speech.    Svnft  &  Co.  v.  U.  S.,  196  U.  S.  375,  395  (1905). 

§  423.  New  Problem  in  Pleading. 

"The  scheme  alleged  is  so  vast  that  it  presents  a  new 
problem  in  pleading.  If,  as  we  must  assume,  the  scheme  is 
entertained,  it  is,  of  course,  contrary  to  the  very  words  of 
the  Statute.  Its  size  makes  the  violation  of  the  law  more 
conspicuous,  and  yet  the  same  thing  makes  it  im]iossil)le 
to  fasten  the  jirincipal  fact  to  a  certain  time  and  i)lace. 
The  elements,  too,  are  so  numerous  and  shifting,  even  the 
constituent  parts  alleged  are  and  from  their  nature  must 
be,  so  extensive  in  time  and  space,  that  something  of 
the  same  impossibility  applies  to  them."  (Mr.  Justice 
Holmes.)  Swift  &  Co.  v.  U.  S.,  196  U.  S.  375,  395-396 
(1905);  Ware-Kramer  Tobacco  Co.  v.  Am.  Tobacco  Co.,  178 
Fed.  117,  122,  123.    (C.  C— E.  D.  North  Carohna,  1910.) 

§  424.  Full  History  of  Facts. 

"In  several  of  the  reported  cases,  the  complaint,  dec- 


Action  at  Law  Under  Anti-Trust  Laws      199 

laration,  or  petition  is  set  out  in  full  showing,  that,  in 
setting  forth  the  first  essential  fact,  the  pleaders  have  given 
a  full  history  of  the  conduct  and  course  of  business  of  the 
defendants  and  this  has  generally  been  sustained  by  the 
courts."  (Connor,  District  Judge.)  Ware-Kramer  To- 
bacco Co.  V.  Am.  Tobacco  Co.,  178  Fed.  117,  124.  (C.  C— 
E.  D.  North  Carolina,  1910.) 

§  425.  Essential  Averments. 

'"The  petition  need  only  aver,  and  state  facts  to  show, 
that  the  defendants  have  committed  one  or  more  of  the 
offenses  condemned  by  the  first  and  second  sections,  that 
the  plaintiff  is  a  person  injured  within  the  meaning  of  the 
seventh  section,  and  the  amount  of  damages  it  sustained 
})y  such  injury,"  (Shelby,  Circuit  Judge.)  People's  To- 
bacco Co.  V.  Am.  Tobacco  Co.,  170  Fed.  396,  407-408. 
(C.  C.  A.  Fifth  Circuit,  1909.) 

"The  essential  averments  in  a  declaration  under  this 
section  (Section  7)  would  appear  to  be  (1)  That  the  de- 
fendant has  done  one  or  more  of  the  things  forbidden  by 
the  first  and  second  sections  of  the  statute;  (2)  that  by 
such  action  of  the  defendant  the  plaintiff  has  been  injured 
in  his  business  or  property;  and  (3)  that  damages  were 
.sustained."  (Colt,  Circuit  Judge.)  Cilley  v.  United  Shoe 
Mach.  Co.,  202  Fed.  598,  599.    (D.  C.  Mass.  1913.) 

§  426.  Rice  v.  Standard  Oil  Company. 

In  the  District  of  New  Jersey,  a  motion  was  granted 
to  strike  out  a  declaration  based  upon  a  cause  of  action 
ari.sing  under  section  seven  of  the  Sherman  Law,  the  prin- 
cipal ground  relied  upon  by  the  Court  being  that  there 
was  a  confusion  of  distinct  causes  of  action  even  though 
the  facts  were  in  connected  narrative  form.  This  case, 
however,  is  of  doubtful  authority  in  light  of  the  fact  that 


200  Manual  of  the  Sherman  Law 

it  is  largely  based  upon  the  dissenting  opinion  of  Mr.  Jus- 
tice Holmes  in  Northern  Securities  Co.  v.  United  States, 
192  U.  S.  197,  and  demands  that  a  declaration  under  the 
law  be  dra\vn  with  the  same  certainty  as  a  criminal  indict- 
ment, and  that  later  Mr.  Justice  Holmes  appears  in 
United  States  v.  Swift  &  Co.,  196  U.  S.  375,  not  to  be  in 
accord  with  these  views.  See  Rice  v.  Standard  Oil  Co., 
134  Fed.  464,  465-468;  (C.  C.  New  Jersey,  1905);  U.  S. 
V.  Swift  &  Co.,  196  U.  S.  375,  395-396  (1905). 

§  427.  Allegations  of  Facts  Constituting  Conspiracy. 

A  complaint  for  conspiracy  setting  out,  "by  way  of  in- 
ducement, the  circumstances  under  which  the  injury  com- 
plained of  was  committed,  the  conspiring  together  and 
common  purpose  of  the  defendants,  the  means  used  to 
accomplish  their  common  purpose,  the  object  to  be  at- 
tained, the  overt  acts  of  one  or  more  of  the  defendants  in 
pursuance  of  such  common  purpose,"  is  sufficiently  defi- 
nite. (Orton,  J.)  Murray  v.  McGarigle,  69  Wise.  483, 
489  (Supreme  Court,  Wisconsin,  1887);  Ware-Kramer 
Tobacco  Co.  v.  Am.  Tobacco  Co.,  178  Fed.  117,  122.  (C. 
C— E.  D.  North  Carolina,  1910.) 

§  428.  Steps  of  Conspiracy  Constituting  but  one  Cause  of 
Action. 

"As  a  conspiracy  may  be  accomi)lishe(i  by  any  number 
or  variety  of  steps,  some  of  which  may  be  in  the  form  of 
contracts,  others  as  combinations,  if  the  contracts  and 
the  combinations  referred  to  in  the  declaration  are  but 
steps  in  such  conspiracy,  and  such  conspiring  has  for  its 
purpose  the  alleged  monopoly,  the  whole  constitute  l)ut 
one  cause  of  action."  (Rellstab,  District  Judge.)  Buck- 
eye Powder  Co.  v.  E.  I.  Du  Pont  De  Nemours  P.  Co.,  196 
Fed.  514,  517,  518.    (D.  C.  New  Jersey,  1912.) 


Action  at  Law  Under  Ani'i-Trust  Laws      201 

"The  use  of  general  terms  in  alleging  the  character  of  a 
series  of  such  steps  (comprising  an  alleged  conspiracy), 
or  some  of  the  methods  employed  in  performing  or  en- 
forcing them,  or  the  failure  to  give  the  names  of  the  per- 
sons said  to  have  figured  in  the  furtherance  and  effective- 
ness of  such  conspiracy,  does  not  necessarily  condemn  the 
pleading  as  irregular  or  defective."  (Rellstab,  District 
Judge.)  Buckeye  Poiuder  Co.  v.  E.  I.  Du  Pont  De  Nemours 
P.  Co.,  196  Fed.  514,  520.    (D.  C.  New  Jersey,  1912.) 

§  429.  Scheme  or  Combination  as  a  Whole. 

The  thing  forbidden  or  declared  to  be  unlawful  by  the 
act  may  reside  in  averments  setting  out  a  scheme  or  com- 
bination as  a  whole  within  sections  1  and  2  of  the  Act, 
without  a  declaration  so  framed  being  void  for  duphcity 
or  uncertainty.  Cilley  v.  United  Shoe  Machinery  Co.,  202 
Fed.  598,  GOl  (D.  C.  Mass.  1913);  Strout  v.  United 
Shoe  Machinery  Co.,  202  Fed.  602,  604.  (D.  C.  Mass. 
1913.) 

§  430.  Examples  of  Plaintifif's  Pleadings. 

For  examples  of  plaintiff's  allegations  under  Section 
Seven  held  to  be  sufficient,  see  the  following  cases,  in 
which  the  plaintiff's  form  of  pleading  is  set  out  in  full: 
People's  Tobacco  Co.  v.  Am.  Tobacco  Co.  (C.  C.  A.),  170 
Fed.  396;  Buckeye  Powder  Co.  v.  E.  I.  Du  Pont  De  Nemoiirs 
P.  Co.  (D.  C),  196  Fed.  514;  Loewe  v.  Lawlor,  208  U.  S. 
274. 

§  431.  Pendency  of  Action  in  State  Court. 

"When  suits  are  pending  between  the  same  parties  for 
the  same  cause  of  action,  and  demanding  the  same  form 
of  relief  in  both  the  state  and  federal  courts,  which  have 
concurrent  jurisdiction  in  the  same  territory,   and  the 


202  Manual  of  the  Sherman  Law 

federal  jurisdiction  is  based  upon  diversity  of  citizenship, 
a  plea  in  abatement  alleging  the  pendencj^  of  one  will  be 
futile  as  against  the  other."  (Platt,  District  Judge.) 
D.  E.  Loewe  &  Co.  v.  Lawlor,  130  Fed.  633  (C.  C.  Con- 
necticut, 1904) ;  Robinson  v.  Suburban  Brick  Co.,  127  Fed. 
804,  807  (C.  C.  A.  Fourth  Circuit,  1904),  and  cases  cited. 
It  is  not  true,  however,  that  where  diversity  of  citizen- 
ship is  absent  the  reason  for  the  above  rule  departs.  A 
state  court  cannot  in  the  trial  of  a  case  therein  pending 
invoke  section  seven  of  the  anti-trust  act  in  behalf  of  the 
plaintiff,  and  under  its  authority  assess  treble  damages. 
Therefore,  such  case  cannot  be  pleaded  lis  'pendens  in  a 
suit  for  the  same  cause  of  action  brought  by  the  same 
plaintiff  in  one  of  the  federal  district  courts.  "The  same 
case  is  not  depending  in  both  courts."  (Platt,  District 
Judge.)  D.  E.  Loewe  &  Co.  v.  Laivlor,  130  Fed.  633,  634. 
(C.  C.  Connecticut,  1904.) 

§  432.  General  Appearance  and  Waiver. 

A  general  appearance  on  the  part  of  one  of  the  defend- 
ants must  be  deemed  a  waiver  of  the  objection  of  a  mis- 
joinder because  the  other  defendants  are  not  inhabitants 
of  the  district  where  the  suit  is  brought.  Loiury  v.  Tile, 
Mantel  &  Grate  Assn.,  98  Fed.  817,  822.  (C.  C— N.  D. 
California,  1899.) 

Where  such  defendant  did  not  file  his  demurrer  for  the 
special  and  single  purpose  of  objecting  to  the  jurisdiction, 
but  for  the  further  purpose  of  attacking  the  merits  of  the 
case  upon  the  facts  stated  in  the  complaint,  the  appearance 
of  such  defendant  must  be  regarded  as  a  general  appear- 
ance, and  he  is  therefore  prevented  from  objecting  that 
his  co-defendants  are  improperly  joined  with  him.  Lowry 
v.  Tile,  Mantel  &  Grate  Assn.,  98  Fed.  817,  823-824. 
(C.  C— N.  D.  California,  1899.) 


Action  at  Law  Under  Anti-Trust  Laws      203 

§  433.  "Withdrawal  of  Plea  to  File  Demurrer. 

"Allowing  the  tlefendant  to  withdraw  its  plea  and  file 
its  demurrer"  is  "a  matter  which  rested  entirely  in  the 
sound  discretion  of  the  court.  ...  If  it  appeared  that 
the  plaintiff  had  misconceived  his  rights,  and  that  he  has 
no  cause  of  action,  it  would  seem  that  the  interests  of  the 
parties  and  the  speedy  administration  of  justice  were  alike 
furthered  by  permitting  the  question  to  be  raised  and  de- 
cided at  once,  thereby  saving  costs  and  expense  to  the 
parties."  (Cross,  District  Judge.)  Loeb  v.  Eastman  Kodak 
Co.,  183  Fed.  704,  710.    (C.  C.  A.  Third  Circuit,  1910.) 

§  434.  BiU  of  Particulars. 

Where  the  allegations  though  general,  are  reasonably 
definite  and  certain  and  are  sufficient  to  apprise  the  de- 
fendant of  the  offense  complained  of,  the  defendant  if  he 
deems  himself  entitled  to  more  specific  information,  may 
apply  for  a  bill  of  particulars  in  regard  thereto.  Buckeye 
Powder  Co.  v.  E.  I.  Du  Pont  Be  Nemours  P.  Co.,  196  Fed. 
514,  522.    (D.  C.  New  Jersey,  1912.) 

§  435.  Discretion  of  Lower  Court, 

"The  refusal  of  an  inferior  court  to  allow  a  plea  to  be 
amended,  or  a  new  plea  to  be  filed,  or  to  grant  a  new  trial 
or  a  continuance,  or  to  reinstate  a  cause  which  has  been 
legally  dismissed,  cannot  be  questioned  for  error  in  this 
(Supreme)  Court."  (Mr.  Justice  Campbell.)  Spencer  v. 
Lapsley,  20  How.  264,  267  (1857). 

§  436.  Delayed  Raising  of  Defense  in  Appellate  Court. 

It  is  manifest  that  where  it  is  not  urgetl  until  the  case  is 
in  the  Supreme  Court  that  a  defendant  corporation  was  in- 
dividually liable  as  being  of  itself  an  illegal  combination, 
that  such  contention  will  not  avail  where  it  appears  that 


204  Manual  of  the  Sherman  Law 

the  case  was  tried  and  ruled  upon  in  the  court  below  solely 
on  the  ground  of  the  co-operation  of  the  two  principal 
tlefendants  in  a  scheme  of  monopoly  and  restraint  of 
trade,  and  that  a  ruling  was  not  there  invoked  as  to  the 
separate  liability  of  either.  Virtue  v.  Creamery  Package 
Co.,  227  U.  S.  8,  38-39. 

§  437.  Allegations  must  show  Damage. 

If  the  pleadings  in  a  suit  under  Section  7  do  not  contain 
allegations  of  acts  which  have  injured  the  plaintiff,  "it  is 
unnecessary  to  consider  them  however  nnich  the}'  may 
contravene  the  other  provisions  of  the  statute."  (Noyes, 
Circuit  Judge.)  Am.  Banana  Co.  v.  United  Fruit  Co.,  166 
Fed.  261,  263.     (C.  C.  A.  Second  Circuit,  1908.) 

§  438.  Exercise  of  Power  Resulting  in  Injury. 

The  power  under  and  jmrsuant  to  the  combination  to 
do  the  prohibited  things  is  what  brands  the  combination 
as  illegal,  not  the  actual  exercise  of  that  power,  although 
when  a  plaintiff  sues  for  damages  he  is  required  to  show 
that  the  operation  of  such  power  resulted  in  injury  to  him. 
O'Halloran  v.  A77i.  Sea  Green  Slate  Co.,  207  Fed.  187,  191. 
(D.  C— N.  D.  New  York,  1913.) 

§  439.  Injury  Where  Restraint  is  Incomplete. 

"The  act  does  not  appear  to  require  that  the  restraint 
of  trade  should  be  so  complete  as  to  amount  to  total  de- 
struction, .  .  .  as  injury  to  the  l)usiness  or  property  of  the 
plaintiff  might  result  although  the  objects  of  the  illegal 
combination  were  only  partially  accomi)lished."  (Evans, 
District  Judge.)  Monarch  Tobacco  H'o/7i.s  v.  Am.  Tobacco 
Co.,  165  Fed.  774,  781.     (C^  C.— W.  D.  Kentucky,  1908.) 

§  440.  Injury  Produced  by  Acts  Tainted  with  Illegal  Scheme. 
-\n  unlawful  con.spiracy  and  combination  does  not  in- 


Action  at  Law  Under  Anti-Trust  Laws      205 

jure  a  person  under  section  7,  "unless  something  be  done 
to  render  the  conspiracy  and  combination  effective;  but 
whatever  is  done  by  those  engaged  in  the  scheme  or  plot 
with  the  motive  and  intent  to  csury  out  the  unla\vful 
purpose  itself  becomes  tainted  with  the  illegality  of  the 
scheme"  and  thereby  comes  within  said  section.  (Evans, 
District  Judge.)  Monarch  Tobacco  Works  v.  Am.  Tobacco 
Co.,  165  Fed.  774,  780.  (C.  C— W.  D.  Kentucky, 
1908.) 

§  441.  Something  more  than  Mental  Intention  Required. 

It  seems  that  something  more  than  a  mere  mental  in- 
tention to  engage  in  interstate  commerce  is  required  in 
order  to  chaf-ge  a  defendant  with  damages  for  preventing 
the  carrying  out  of  such  intention.  Pa.  Sugar  Ref.  Co.  v. 
Am.  Sugar  Ref.  Co.,  166  Fed.  254,  260.  (C.  C.  A.  Second 
Circuit,  1908.) 

"It  will  not  be  contended  that  section  7  of  the  statute 
gives  a  cause  of  action  to  any  person  against  another  per- 
son who  had  merely  planned  to  commit  or  unsucessfully 
attempted  to  commit  the  prohibited  acts.  The  illegal  con- 
tract or  attempted  monopoly  must  have  resulted  in  an 
injury  of  some  sort"  to  the  plaintiff.  (Shipman,  Circuit 
Judge,  Concurring  Opinion.)  Dueber  Watch  Case  Mfg. 
Co.  v.  Hoiuard  Watch  Co.,  66  Fed.  637,  646.  (C.  C.  A. 
Second  Circuit,  1895. 

§  442.  General  Allegation  of  Damage  is  Sufficient. 

Where  a  contract  or  combination  in  restraint  of  trade 
and  commerce  among  the  states  has  been  sufRcientlj'^ 
charged,  the  recjuirements  of  law  are  met  by  a  general 
statement  of  damage  to  the  plaintiff  by  reason  thereof. 
Wheeler-StenzelCo.  v.  Nat'l  Window  Glass  J.  Assn.,  152 
Fed.  864,  874-875  (C.  C.  A.  Third  Circuit,  1907);  Mon- 


2()ti  Manual  of  the  Sherman  Law 

arch  Tobacco  Works  v.  Am.  Tobacco  Co.,  165  Fed.  774,  782. 
(C.  C— W.  D.  Kentucky,  1908.) 

§  443.  Proximate  and  Continuing  Damages. 

The  plaintiff  may  recover  all  damages  which  are  the 
proximate  and  natural  result  of  the  acts  complained  of, 
including  such  damages  as  may  have  continued  or  re- 
sulted therefrom  after  the  commencement  of  the  suit. 
Lawlor  v.  Loewe,  209  Fed.  721,  729.  (C.  C.  A.  Second  Cir- 
cuit, 1913.) 

"  Damages  accruing  since  the  action  begun  were  allowed, 
but  only  such  as  were  the  consequence  of  acts  done  before 
and  constituting  part  of  the  cause  of  action  declared  on." 
Mr  Justice  Holmes.)  Lawlor  v.  Loewe,  235  U.  S.  522,  536 
(1915). 

§  444.  General  Rule. 

The  general  rule  is  that  where  the  damages  claimed  are 
such  as  would  usually  or  naturally  accompany  or  follow 
or  be  included  in  the  results  of  the  injuries  complained  of, 
they  may  be  stated  in  general  terms.  Other  and  further 
damages,  however,  can  neither  be  proved  or  recovered 
unless  expressly  averred  and  shown.  Monarch  Tobacco 
Works  Y.Am.  Tobacco  Co.,  165  Fed.  774,  782.  (C.  C— W. 
D.  Kentucky,  1908.) 

§  445.  Actual  Damages  only  Recoverable. 

"Actual  damages  only  may  be  secured.  Those  that  are 
speculative,  remote,  uncertain,  may  not  form  the  basis 
of  a  lawful  judgment.  The  actual  damages  which  will 
sustain  a  judgment  must  be  established,  not  by  conjec- 
tures or  unwarranted  estimates  of  witnesses,  but  by  facts 
from  which  their  existence  is  logically  and  legally  inferable. 
The  speculations,  guesses,  estimates  of  witnesses  form  no 


Action  at  Law  LiNDKii  Anit-Trust  LAwa      207 

better  basis  of  recovery  than  the  speculations  of  the  jury 
themselves.  Facts  must  be  proved,  data  must  be  given 
which  form  a  rational  l)asis  for  a  reasonably  correct  esti- 
mate of  the  nature  of  the  legal  injury  and  of  the  amount 
of  the  damages  which  resulted  from  it,  before  a  judgment 
of  recovery  can  be  lawfully  rendered."  (Sanborn,  Cir- 
cui(  Judge.)  Central  Coal  &  Coke  Co.  v.  Hartman,  111 
Fed.  96,  98.    (C.  C.  A.  Eighth  Circuit,  1901.) 

§  446.  Burden  of  Proof  on  Plaintiflf. 

The  burden  of  proof  is  on  the  plaintiff  to  show  some 
real  and  actual  damage  to  his  business  or  property.  Un- 
less he  proves  such  damage  by  a  preponderance  of  com- 
petent evidence,  the  verdict  must  be  for  the  defendant. 
"The  items  of  damage  claimed  must  be  established  b.y 
proof  of  facts  from  which  they  may  be  rationally  inferred 
with  reasonable  certainty  by  the  jur3^"  (Holland,  Dis- 
Irict  Judge.)  Loder  v.  Joyne,  142  Fed.  1010,  1019.  (C. 
C— E.  D.  Pennsylvania,  1906.) 

§  447.  Reasonable  Certainty. 

"The  damages  which  the  law  contemplates,  and  which 
the  act  of  Congress  provides  for,  must  be  reasonable  dam- 
ages ascertainable  upon  the  evidence  presented  in  the 
case.  There  must  l^e  facts,  transactions,  actual  evidence 
of  some  material  and  pertinent  character,  relating  to  a 
business  from  which  the  jury  can  ascertain  with  reason- 
able certainty  that  damage  has  actually  l:)een  worked  to 
such  business,  before  any  verdict  in  damages  can  be  re- 
turned, other  than  nominal  damages,"  (Morrow,  Circuit 
Judge.)  Lowry  v.  Tile,  Mantel  &  Grate  Assn.,  106  Fed. 
38,  46.    (C.  C— N.  D.  California,  1900.) 

"  While  the  law  puts  the  burden  of  proof  upon  the  plain- 
tiff and  requires  the  proof  of  such  facts  as  will  enable  the 


208  Manual  ok  the  Sherman  Law 

jury  to  arrive  at  the  amount  of  damage  with  reasonable 
certainty,  it  will  not  permit  the  defendants  who  are, 
through  their  wrongful  acts,  responsible  for  the  plaintiff's 
injury,  to  carry  this  requirement  beyond  the  measure  of 
proof  thus  stated.  He  is  required  to  prove  his  claim  with 
reasonable  certaint}'  and  no  more."  (Holland,  District 
Judge.)  Loder  v.  Jayne,  142  Fed.  1010,  1020.  (C.  C— 
E.  D.  Pennsylvania,  1906.) 

§  448.  Speculative  and  Remote  Damages. 

"  If  the  evidence  in  the  case  in  the  matter  of  damage  to 
the  business  of  the  plaintiffs  has  not  shown  any  real  and 
substantial  damage  to  their  business  l)y  reason  of  the  asso- 
ciation, apart  from  conjecture  or  mere  speculation,  then 
they  are  not  entitled  to  any  substantial  compensation,  and 
no  verdict  in  damages  should  be  rendered  in  their  favor, 
except  in  the  sum  of  one  dollar,  or  other  trifling  amount." 
(Morrow,  Circuit  Judge.)  Lowry  v.  Tile,  Mantel  <Sc 
Grate  Asm.,  100  Fed.  38,  47.  (C.  C— N.  D.  California, 
1900.) 

§  449.  Anticipated  Profits  of  a  Business. 

"The  anticipated  profits  of  a  business  are  generally 
so  dependent  upon  numerous  and  uncertain  contingencies 
that  their  amount  is  not  susceptible  of  proof  with  any 
reasonable  degree  of  certainty;  hence  the  general  rule  that 
(except  in  case  of  an  established  business)  the  expected 
profits  of  a  commercial  business  are  too  remote,  specula- 
tive, and  uncertain  to  warrant  a  judgment  for  their  loss." 
(Sanborn,  Circuit  Judge.)  Central  Coal  d'  Coke  Co.  v. 
Hartman,  111  Fed.  96,  98  (C.  C.  A.  Eighth  Circuit,  1901), 
and  cases  cited. 

§  450.  Anticipated  Profits  of  Established  Business. 

"  One  who  seeks  to  recover  for  the  loss  of  the  anticipated 


Action  at  Law  Under  Anti-Trust  Laws      209 

profits  of  an  established  business  without  proof  of  the  ex- 
penses and  income  of  the  business  for  a  reasonable  length 
of  time  before  as  well  as  during  the  interruption  is  in  no 
better  situation.  In  the  absence  of  such  proof,  the  prof- 
its he  claims  remain  speculative,  remote,  uncertain,  and 
mcapable  of  recovery."  (Sanborn,  Circuit  Judge.)  Cen- 
tral Coal  &  Coke  Co.  v.  Hartman,  111  Fed.  96,  99  (C. 
C.  A.  Eighth  Circuit,  1901),  and  cases  cited. 

"  Proof  of  the  expenses  and  of  the  income  of  the  business 
for  a  reasonable  time  anterior  to  and  during  the  interrup- 
tion charged,  or  of  facts  of  equivalent  import,  is  indis- 
pensable to  a  lawful  judgment  for  damages  for  the  loss  of 
the  anticipated  profits  of  an  established  business."  (San- 
born, Circuit  Judge.)  Central  Coal  &  Coke  Co.  v.  Hart- 
man,  111  Fed.  96,  99  (C.  C.  A.  Eighth  Circuit,  1901), 
and  cases  cited. 

§  461.  Future  Profits  of  New  Business. 

"  He  who  is  prevented  from  embarking  in  a  new  business 
can  recover  no  profits,  because  there  are  no  provable  data 
of  past  business  from  which  the  fact  that  anticipated 
profits  would  have  been  realized  can  be  legally  deduced." 
(Sanborn,  Circuit  Judge.)  Central  Coal  &  Coke  Co.  v. 
Hartman,  111  Fed.  96,  99.    (C.  C.  A.  Eighth  Circuit,  1901.) 

§  462.  Preventing  Birth  of  Business. 

"Neither  the  letter  of  the  statute  nor  its  purpose  dis- 
tinguishes between  strangling  a  commerce  which  has  been 
born,  and  preventing  the  birth  of  a  commerce  which  does 
not  exist."  (Putnam,  Circuit  Judge.)  U.  S.  v.  Patterson, 
59  Fed.  280,  283.    (C.  C.  Mass.  1893.) 

§  453.  Preventing  Plaintiff  from  Engaging  in  Business. 
"  A  contract  to  strangle  a  threatened  competition  by 


210  Manual  of  the  Sherman  Law 

preventing  the  construction  of  an  immediately  projected 
line  of  railway,  which,  if  constructed,  would  naturally  and 
substantially  compete  with  an  existing  line  for  interstate 
traffic  would  be  in  violation  of  the  Anti-Trust  Law." 
(Adams,  Circuit  Judge.)  U.  S.  v.  Union  Pacific  Railroad 
Co.,  188  Fed.  102,  117  (C.  C.  Utah,  1911),  citing  Interstate 
Com.  Com.  v.  Philadelphia  &  R.  Ry.  Co.,  123  Fed.  969,  972 
(C.  C— S.  D.  New  York,  1903) ;  Thomsen  v.  Union  Castle 
Mail  S.  S.  Co.,  166  Fed.  251,  253  (C.  C.  A.  Second  Circuit, 
1908);  Penn.  H.  Co.  v.  Commonwealth,  3  Sadler  (Pa.  Sup. 
Ct.  Cases),  83,  91,  7  Atlantic,  374.  See  also  U.  S.  v. 
Patterson,  59  Fed.  280,  283.    (C.  C.  Mass.  1893.) 

"Whether  a  combination  was  entered  into  before  or 
after  the  plaintiff  commenced  to  do  business  is  .  .  .  im- 
material. The  statute  applies  to  continuing  combinations. 
It  is  as  unlawful  to  prevent  a  person  from  engaging  in 
business  as  it  is  to  drive  a  person  out  of  business."  (No yes, 
Circuit  Judge.)  Thomsen  v.  Union  Castle  Mail  S.  S.  Co., 
166  Fed.  251,  253.    (C.  C.  A.  Second  Circuit,  1908.) 

§  464.  Exclusion  from  Commencing  Business. 

"The  defendants  next  contend  that  the  complaint  fails 
to  state  a  (;ause  of  action,  because  it  appears  that  the 
plaintiff  was  not  engaged  in  business  at  the  time  of  the 
conspiracy;  that  it  had  no  established  business  to  injure. 
But  in  the  very  recent  case  of  Thomsen  v.  Union  Castle 
Mail  Steamship  Co.  (decided  October,  1908),  166  Fed.  251, 
this  court  said :  '  It  is  as  unlawful  to  prevent  a  person  from 
engaging  in  business  as  it  is  to  drive  a  person  out  of  busi- 
ness.' A  person  has  a  legal  right  to  engage  in  a  lawful 
business.  If  he  is  unlawfully  excluded  from  exercising 
this  right,  when  he  is  prepared  and  intends  to  exercise  it, 
he  suffers  an  injury  for  which  the  law  awards  damages — 
he  is  'injured'  within  the  meaning  of  the  federal  statute. 


Action  at  Law  Under  Anti-Tkust  Laws      211 

He  may  be  unable  to  prove  substantial  compensatory 
damages,  but  in  stating  the  infringement  of  his  legal  rights 
he  states  a  cause  of  action  at  least  for  nominal  damages, 
and  may  perhaps  so  state  it  as  to  call  for  exemplary  dam- 
ages. Scott  V.  Donald,  165  U.  S.  58,  17  Sup.  Ct.  265,  41  L. 
Ed.  632."  (No YES,  Circuit  Judge.)  Pa.  Sugar  Ref.  Co. 
V.  Atn.  Sugar  Ref.  Co.,  166  Fed.  254,  260.  (C.  C.  A. 
Second  Circuit,  1908.) 

§  455.  Exemplary  Damages. 

That  threefold  damages  are  recoverable  under  the  act 
does  not  necessarily  preclude  the  plaintiff  from  obtaining 
a  verdict  of  punitive  or  exemplary  damages  in  a  proper 
case,  and  from  being  entitled  to  treble  the  amount  of  such 
damages,  see  Pa.  Sugar  Ref.  Co.  v.  Am.  Sugar  Ref.  Co., 
166  Fed.  254,  260.  (C.  C.  A.  Second  Circuit,  1908.) 
Contra,  Strout  v.  United  Shoe  Machinery  Co.,  195  Fed. 
313,  317  (D.  C.  Mass.  1912)  citing  cases  which,  however, 
do  not  appear  to  be  in  point. 

The  claim  of  a  plaintiff  to  the  recovery  of  punitive  or 
vindictive  damages  under  a  declaration  at  law  brought 
in  a  suit  under  section  seven  does  not  make  such  declara- 
tion bad  for  duplicity.  Buckeye  Powder  Co.  v.  E.  I.  Du 
Pont  De  Nemours  P.  Co.,  196  Fed.  514,  519.  (D.  C.  New 
Jersey,  1912.) 

§  456.  Intention  and  Preparedness  to  Engage  in  Business. 

In  order  to  state  a  cause  of  action  under  section  7  of 
the  statute,  it  is  not  necessary  to  aver  an  injury  to  an  ex- 
isting business,  the  carrying  on  of  which  involves  inter- 
state commerce,  "but  it  is  necessary  to  state  facts  show- 
ing an  intention  and  preparedness  to  engage  in  business." 
(NoYES,  Circuit  Judge.)  Am.  Banana  Co.  v.  United  Fruit 
Co.,  166  Fed.  261,  264.    (C.  C.  A.  Second  Circuit,  1908.) 


212  Manual  or  the  Sherman  Law 

§  457.  Money  Actually  Expended  in  Building  and  Equipping 
Refinery. 
Where  a  corporation  spends  large  sums  of  money  in 
building  and  equipping  a  sugar  refinery  to  be  operated  by 
a  new  business  prepared  and  ready  to  engage  in  interstate 
commerce,  and  is  prevented  from  so  engaging  by  a  com- 
l)ination  forbidden  by  the  Act,  the  amount  of  money  ac- 
tually lost  in  the  enterprise  cannot  be  regarded  as  specu- 
lative and  may  be  recovered  as  damages.  Penn.  Sugar 
Refining  Co.  v.  Am.  Sugar  Refining  Co.,  166  Fed.  254,  260. 
(C.  C.  A.  Second  Circuit,  1908). 

§  458.  Injuries  to  Inter  or  Intrastate  Business. 

"The  injury  to  his  business,  whether  it  be  in  its  volume 
or  profit,  is  the  same  whether  that  business  be  inter  or 
intrastate — whether  he  buy  to  extend  his  plant,  or  to  sell 
again  in  an  interstate  business.  This  excessive  price  is 
the  expected  and  intended  result  of  the  unlawful  combina- 
tion to  restrain  interstate  trade  in  that  commodity.  That 
such  a  plaintiff  is  entitled  to  recover  the  damages  thus 
sustained  in  his  business,  whatever  its  character,  would 
seem  to  be  the  plain  purpose  of  the  seventh  section  of  the 
law  of  Congress."  (Lurton,  Circuit  Judge.)  City  of  At- 
lanta V.  Chattanooga  F.  &  P.  Works,  127  Fed.  23,  27.  (C. 
C.  A.  Sixth  Circuit,  1903.) 

§  459.  Damages  Entirely  Within  State. 

Congress  through  Section  7  gives  right  to  recover  dam- 
ages entirely  incurred  within  the  boundaries  of  one  state, 
by  reason  of  a  combination  forbidden  ]).y  the  Act,  even 
where  the  plaintiff  is  not  engaged  in  interstate  commerce. 
City  of  Atla7ita  v.  Chattanooga  Foundry  &  Pipe  Works, 
127  Fed.  23,  25,  27.    (C.  C.  A.  Sixth  Circuit,  1903.) 

"The   damage   complained   of  must   almost   or   quite 


Action  at  Law  Under  Anti-Trust  Laws      213 

always  be  damage  in  property,  that  is,  in  the  money  of  the 
plaintiff,  which  is  owned  within  the  state.  If  Congress 
had  power  to  make  the  acts  which  led  to  the  damage  il- 
legal, it  could  authorize  a  recovery  for  the  damage  al- 
though the  latter  was  suffered  wholly  within  the  bound- 
aries of  one  State."  {Mr.  Justice  Holmes.)  Chattanooga 
Foundry  &  Pipe  Works  v.  Atlanta,  203  U.  S.  390,  397 
(1906). 

§  460.  Necessity  of  Investing  Additional  Capital.    Increased 
Cost  of  Doing  Business. 

It  may  be  shown  as  an  element  of  damages  that  it  was 
necessary  for  a  plaintiff  to  invest  extra  capital  in  his  busi- 
ness because  of  the  existence  of  the  combination.  Loder 
v.  Jayne,  142  Fed.  1010,  1020.  (C.  C— E.  D.  Pennsyl- 
vania, 1906.) 

"If  by  reason  of  a  combination  in  violation  of  the  Sher- 
man Act,  he  be  made  to  conduct  what  business  he  does 
at  a  greater  cost,  though  it  be  greater  in  volume,  but  by 
reason  of  the  injury  done  him  at  a  less  percentage  of  re- 
turn, and  he  can  show  this,  he  is  entitled  to  collect  it  from 
those  who  have  injured  him."  (Holland,  District  Judge.) 
Loder  v.  Jayne,  142  Fed.  1010,  1022.  (C.  C— E.  D.  Penn- 
sylvania, 1906.) 

§  461.  Enhanced  Price  of  Commodities. 

"If  the  effect  of  a  combination  to  enhance  the  price  of 
a  commodity  which  is  the  subject  of  interstate  commerce 
be  to  restrain  such  commerce,  within  the  meaning  of  the 
law  of  Congress,  by  reason  of  its  tendency  to  affect  the 
volume  of  such  trade,  then  the  effect  upon  the  business  of 
one  who  has  paid  the  enhanced  price,  in  an  interstate 
transaction,  must  be  to  correspondingly  affect  the  volume 
or  profit  of  tliat  business.    The  difference  between  what 


214  Manual  of  the  Sherman  Law 

he  was  thus  compelled  to  pay  and  the  reasonable  price  of 
the  commodity  under  natural  competitive  conditions 
would  be  an  injury  to  that  business  directl}'  resulting  from 
such  unlawful  combination."  (Lurton,  Circuit  Judge.) 
City  of  Atlanta  v.  Chattanooga  F.  &  P.  Works,  127  Fed.  23, 
27.    (C.  C.  A.  Sixth  Circuit,  1903.) 

Anyone  may  be  injured  in  his  property  if  not  in  his 
business  by  being  led  to  pay  more  than  the  worth  of  a 
commodity.  "A  person  whose  property  is  diminished  by 
a  payment  of  money  wrongfully  induced  is  injured  in  his 
property."  {Mr.  Justice  Holmes.)  Chattanooga  Foundry 
iSc  Pipe  Works  v.  Atlanta,  203  U.  S.  390,  396  et  seq. 
(1906). 

§  462.  Excess  Cost  of  Commodities  and  Extra  Clerk  Hire. 

Increased  or  excess  cost  of  commodities  and  extra  clerk 
hire,  occasioned  by  the  restraint  of  trade  of  the  defendants 
may  be  shown  as  elements  of  damage.  Loder  v.  Jayne, 
142  Fed.  1010,  1019-20.  (C.  C— E.  D.  Pennsylvania, 
1906.) 

Damages  may  be  claimed  arising  out  of  additional  labor 
required  to  be  bestowed  by  a  person  upon  his  business  by 
reason  of  an  unlawful  combination.  Loder  v.  Jayne,  142 
Fed.  1010,  1020.    (C.  C— E.  D.  Pennsylvania,  1906.) 

§  463.  Injury  to  Property. 

"A  man  is  injured  in  his  property  when  his  property  is 
diminished.  He  would  not  be  said  to  have  suffered  an  in- 
jury to  his  property  unless  the  harm  fell  upon  some  object 
more  definite  and  less  ideal  than  his  total  wealth.  A  trade- 
mark, or  a  trade-name,  or  a  title  is  property,  and  is  re- 
garded as  an  object  of  injury  in  various  ways."  (Mr. 
Justice  Holmes.)  Chattanooga  Foundry  &  Pipe  Works  v. 
Atlanta,  203  U.  S.  390,  399  (1906). 


Action  at  Law  Under  Anti-Trust  Laws      215 

§  464.  Effect  of  Rebates. 

"If  the  j)laintiffs  were  coerced  into  paying  sums  of 
money,  in  excess  of  reasonable  rates,  which  were  held  for 
the  very  purpose  of  preventing  that  competition  which 
the  statute  is  designed  to  promote  (such  sums  to  be  re- 
bated only  where  plaintiff  refrained  from  patronizing 
competitors),  they  were  damaged,  within  the  mean- 
ing of  the  statute,  to  the  extent  of  the  sums  so  paid." 
(No YES,  Circuit  Judge.)  Thomsen  v.  Union  Castle  Mail 
S.  S.  Co.,  166  Fed.  251,  253.  (C.  C.  A.  Second  Circuit, 
.1908.) 

§  466.  Avoidable  Injuries. 

"The  plaintiffs  in  an  action  of  this  kind  are  not  per- 
mitted to  claim  damage  to  their  business  by  reason  of  an 
association  contrary  to  the  statute,  where  it  was  within 
their  own  power,  in  the  exercise  of  reasonable  diligence,  to 
avert  any  such  damage,  and  to  avoid  any  consequences  of 
injury  to  their  business;  that  is  to  say,  a  party  claiming 
damages  is  bound,  in  the  exercise  of  reasonable  diligence, 
to  safeguard  himself  against  any  avoidable  consequence 
of  the  act  of  another  as  to  which  he  claims  a  right  to  re- 
cover damages."  (Morrow,  Circuit  Judge.)  Lowry  v. 
Tile,  Mantel  &  Grate  Assn.,  106  Fed.  38,  47.  (C.  C— 
N.  D.  California,  1900.) 


§  466.  Set-Off. 

The  action  which  Section  seven  authorizes  must  be  a 
direct  one,  and  the  damages  claimed  thereunder  cannot  be 
set  off  in  actions  that  have  no  direct  connection  with  the 
alleged  offenses  resulting  in  the  injuries  from  which  said 
damages  have  been  sustained.  Connolly  v.  Union  Sewer 
Pipe  Co.,  184  U.  S.  540,  552  (1902). 


216  Manual  of  the  Sherman  Law 

§  467.  Attorney's  Fee. 

The  amount  of  the  attorney's  fee  is  to  be  determined 
by  the  court  and  not  by  the  jury.  After  rendition  of  the 
verdict,  a  reasonable  attorney's  fee  for  services  rendered 
should  be  promptly  claimed.  After  proof  of  such  services, 
the  trial  court  in  the  exercise  of  a  reasonable  discretion, 
will  award  the  attorney  reasonable  compensation.  Mon- 
tague V.  Lownj,  193  U.  S.  38,  48  (1904);  Clabaugh  v.  So. 
Wholesale  Grocers'  Assn.,  181  Fed.  706,  708.  (C.  C— N.  D. 
Alabama,  S.  D.  1910.) 

If  there  is  nothing  to  go  to  the  jury  for  single  damages, 
then  the  court  has  no  jurisdiction  to  render  any  judg- 
ment for  treble  damages.  The  same  is  true  as  to  the  at- 
torney's fee, — which  similarly  is  merely  an  incident  to  a 
judgment  for  the  plaintiff.  Consequently  if  no  judgment 
is  obtained,  no  allowance  for  the  attorney's  fee  can  be 
made.  Clahaugh  v.  So.  Wholesale  Grocers  Assn.,  181  Fed. 
706,  708.    (C.  C— N.  D.  Alabama,  S.  D.  1910.) 

§  468.  Direction  of  Verdict. 

Where  the  jury  are  unable  to  agree,  the  court  may  in  a 
proper  case  give  them  direct  instructions  to  find  for  either 
party  where  warranted  by  material  and  uncontroverted 
facts.  Cravens  v.  Carter-Crume  Co.,  92  Fed.  479,  484  et  seq. 
(C.  C.  A.  Sixth  Circuit,  1899.) 

Note.  This  case  was  for  enforcement  of  a  contract;  not 
under  Section  seven. 

§  469.  Evidence  of  Conduct  of  Defendant  after  Destruction 
of  Plaintiff's  Business. 
Where  an  "alleged  conspiracy  is  a  continuous  trans- 
action, the  conduct  of  the  alleged  co-conspirators  after" 
the  date  "when  the  plaintiff's  business  is  said  to  have  been 
destroyed,  may  throw  light  upon  the  question  whether  a 


Action  AT  Law  Under  Anti-Trust  Laws      217 

combination  or  conspiracy  did  exist  before  that  date.  No 
testimony  should  be  excluded  which  is  not  clearly  without 
the  issues."  (Ward,  Circuit  Judge.)  Buckeye  Powder  Co. 
V.  Hazard  Powder  Co.,  205  Fed.  827,  830.  (D.  C.  Con- 
necticut, 1913.) 

§  470.  Stolen  Papers  may  be  Offered  in  Evidence. 

"The  fact  that  papers  pertinent  to  the  issue  may  have 
been  illegally  taken  from  the  possession  of  the  party  against 
whom  they  are  offered  was  not  a  valid  objection  to  their 
admissibility."  (Mr.  Justice  Brown.)  Hale  v.  Henkel, 
201  U.  S.  43,  72  (1906). 

§  471.  Introduction  of  Newspapers. 

"The  introduction  of  newspapers,  etc.,  was  proper  in 
large  part  to  show  publicity  in  places  and  directions  where 
the  facts  were  likely  to  be  brought  home  to  the  defendants, 
and  also  to  prove  an  intended  and  detrimental  conse- 
quence of  the  principal  acts  not  to  speak  of  other  grounds." 
(Mr.  Justice  Holmes.)  Lawlor  v.  Loewe,  235  U.  S.  522, 
536  (1915). 

§  472.  Reasons  for  Termination  of  Custom. 

"The  reason  given  by  customers  for  ceasing  to  deal  with 
sellers  of  Loewe  hats,  including  letters  from  dealers  to 
Loewe  &  Co.  were  admissible."  (Mr.  Justice  Holmes.) 
Lawlor  v.  Loewe,  235  U.  S.  522,  536  (1915). 

§  473.  Use  in  Evidence  of  Final  Judgment  or  Decree  Ren- 
dered in  Government  Proceedings. 
A  final  judgment  or  decree  rendered  subsequent  to 
October  15,  1914,  in  any  criminal  prosecution  or  in  any 
suit  or  proceeding  in  equity  brought  by  or  in  behalf  of  the 
United  States  under  the  anti-trust  laws  to  the  effect  that 


218  Manual  of  the  Sherman  Law 

a  defendant  has  violated  said  laws  shall  be  prima  facie 
evidence  against  such  defendant  in  any  suit  or  proceed- 
ing brought  by  any  other  party  against  such  defendant 
under  said  laws  as  to  all  matters  respecting  which  said 
judgment  or  decree  would  be  an  estoppel  as  between  the 
parties  thereto,  excepting  such  judgment  or  decrees  en- 
tered l^y  consent  before  any  testimony  has  been  taken 
after  said  October  15,  1914.  Act  of  October  15,  1914 
(Clayton  Act),  Sect,  5. 


CHAPTER  XVI 

THE  SHERMAN  ANTI-TRUST  ACT  AS  A  DEFENSE  TO  ACTIONS 
AT   LAW    OR    IN    EQUITY 

§  474.  Sherman  Law  is  Good  Defense  when  Pertinent. 

"Any  one  sued  upon  a  contract  may  set  up  as  a  defense 
that  it  is  a  violation  of  the  act  of  Congress,  and  if  found 
to  be  so,  that  fact  will  constitute  a  good  defense  to  the 
action."  {Mr.  Justice  Peckham.)  Bement  v.  Nat'l  Har- 
rmv  Co.,  186  U.  S.  70,  88  (1902). 

§  475.  Enforcement  of  Unlawful  Agreement. 

"  It  is  elementary  law  that  the  courts  will  not  lend  assist- 
ance in  any  way  in  carrying  out  an  illegal  agreement." 
(LuRTON,  Circuit  Judge.)  Continental  Wall  Paper  Co.  v. 
Voight  &  Sons  Co.,  148  Fed.  939,  948  (C.  C.  A.  Sixth 
Circuit,  1906)  citing  McMullen  v.  Hoffman,  174  U.  S.  639, 
654;  Emhrey  v.  Jemison,  131  U.  S.  336,  348. 

"The  authorities  from  the  earliest  time  to  the  present 
unanimously  hold  that  no  court  will  lend  its  assistance  in 
any  way  toward  carrying  out  the  terms  of  an  illegal  con- 
tract." (Mr.  Justice  Peckham.)  McMullen  v.  Hoffman, 
174  U.  S.  639,  654  (1899);  Connolly  v.  Union  Sewer  Pipe 
Co.,  184  U.  S.  540,  549  (1902);  Continental  Wall  Paper  Co. 
V.  Voight  &  Sons  Co.,  212  U.  S.  227,  263  (1909). 

Where  a  plaintiff  entrusts  his  property  to  the  hands  of 
his  confederates  for  the  purpose  of  employing  the  same 
in  the  furtherance  of  offenses  forbidden  by  the  Act,  he  is 
not  permitted  to  invoke  the  assistance  of  a  court  of  equity 

219 


220  Manual  of  the  Sherman  Law 

to  compel  a  division  of  the  spoils,  or  a  restoration  or  ac- 
counting of  his  property  so  invested.  American  Biscuit 
Co.  V.  Klotz,  44  Fed.  721,  725-726.  (C.  C— E.  D.  Louisi- 
ana, 189L) 

§  476.  Parties  in  Pari  Delicto. 

"When  the  parties  are  in  pari  delicto,  and  the  contract 
has  been  fully  executed  on  the  part  of  the  plaintiff,  bj' 
the  conveyance  of  property,  or  by  the  payment  of  money, 
and  has  not  been  repudiated  by  the  defendant,  it  is  now 
equally  well  settled  that  neither  a  court  at  law  nor  a  court 
of  equity  will  assist  the  plaintiff  to  recover  back  the  prop- 
erty conveyed  or  money  paid  under  the  contract."  (Mr. 
Justice  Gray.)  St.  Louis,  etc.,  Ry.  Co.  v.  Terre  Haute,  etc., 
Ry.  Co.,  145  U.  S.  393,  407  (1892);  Harriman  v.  No.  Se- 
curities Co.,  197  U.  S.  244,  296  (1905). 

§  477.  Executed  and  Executory  Contracts. 

"Neither  party  to  an  illegal  contract  will  be  aided  by 
the  court,  whether  to  enforce  it  or  to  set  it  aside.  If  the 
contract  is  illegal,  affirmative  relief  will  not  be  granted, 
unless  the  contract  remains  executory  or  unless  the  parties 
are  considered  not  in  equal  fault,  as  where  the  law  vio- 
lated is  intended  for  the  coercion  of  the  one  party,  and 
the  protection  of  the  other,  or  where  there  has  been  fraud 
or  oppression  on  the  part  of  the  defendant."  {Mr.  Jus- 
tice Gray.)  St.  Louis,  etc.,  Ry.  Co.  v.  Terre  Haute,  etc.,  Ry. 
Co.,  145  U.  S.  393,  407  (1892);  Harriman  v.  No.  Securities 
Co.,  197  U.  S.  244,  296  (1905). 

§  478.  Appointment  of  Receiver. 

"The  court  ought  not,  by  the  appointment  of  a  receiver, 
to  aid  complainant  to  perfect,  and  perhaps  to  enlarge,  his 
combination  or  trust."    (Per  Curiam.)    American  Biscuit 


Shkuman  Law  as  Defense  to  Actions        221 

Co.  V.  Klotz,  44  Fed.  721,  726.    (C.  C— E.  D.  Louisiana, 
1891.) 

§  479.  Inevitable  Tendency  to  Injure. 

Where  '"the  clear  tendency  of  such  an  agreement  is  to 
establish  a  monopoly,  and  to  destroy  competition  in  trade, 
and  for  that  reason,  on  the  ground  of  public  policy,  courts 
will  not  aid  in  its  enforcement.  It  is  no  answer  to  say  that 
competition  in  the  salt  trade  was  not  in  fact  destroyed, 
or  that  the  price  of  the  commodity  was  not  unreasonably 
advanced.  Courts  will  not  stop  to  inquire  as  to  the  degree 
of  injury  inflicted  upon  the  public.  It  is  enough  to  know 
that  the  inevitable  tendency  of  such  contracts  is  injurious 
to  the  pubhc."  (Taft,  Circuit  Judge.)  U.  S.  v.  Addyston 
Pipe  &  Steel  Co.,  85  Fed.  271,  289  (C.  C.  A.  Sixth  Cir- 
cuit, 1898),  quoting  from  Salt  Co.  v.  Guthrie,  35  Ohio  St. 
666. 

§  480.  Enforcement  of  Rebate  Agreement. 

No  cause  of  action  can  be  predicated  upon  one  of  a 
number  of  written  agreements  providing  that  for  the  pur- 
pose of  securing  the  continuous  patronage  of  the  purchaser 
of  certain  liquid  compounds  from  the  manufacturer 
thereof,  such  manufacturer  will  at  the  end  of  six  months 
give  a  rebate  of  seven  cents  per  gallon  for  all  compounds 
so  purchased  provided  such  purchaser  during  said  period 
shall  have  bought  such  kind  of  goods  exclusively  from  said 
manufacturer,  where  such  agreements  were  designed  to 
carry  out  and  secure  the  purpose  of  an  illegal  monopoly. 
Dennehy  v.  M'Nulta,  86  Fed.  825,  826-828.  (C.  C.  A. 
Seventh  Circuit,  1898.) 

§  481.  Essential  Part  of  Illegal  Scheme. 
A  federal  court  will  not  lend  its  aid  to  the  enforcement 


222  Manual  of  the  Sherman  Law 

of  a  contract  for  the  sale  of  goods  which  is  based  upon 
agreements  that  are  essential  parts  of  an  illegal  scheme 
forbidden  by  the  Act.  Continental  Wall  Paper  Co.  v. 
Voight  &  Sons  Co.,  212  U.  S.  227,  262  (1909). 

§  482.  Protection  of  Conspiracy  to  Fix  Rates. 

A  railroad  complainant  cannot  "conspire  unlawfully  to 
fix  rates,  and  then  come  into  a  court  of  equity  and  invoke 
its  aid  to  protect  those  rates  which  are  represented  by  the 
ticket  presented  to  the  court,  and  which  is  wrongfully 
used  by  the  defendants."  (Hazel,  District  Judge.) 
Delaware,  L.  &  W.  R.  Co.  v.  Frank,  110  Fed.  659,  696. 
(C.  C— W.  D.  New  York,  1901.) 

§  483.  Common  Law  Contracts  in  Restraint  of  Trade  not 
Prohibited  but  Unenforceable. 
"The  common  law  does  not  prohibit  the  making  of 
agreements  constituting  such  combinations.  It  merely 
declines,  after  they  have  been  made,  to  recognize  their 
validity  by  refusing  to  make  any  decree  or  order  which 
will  in  any  way  give  aid  to  the  purposes  of  such  combina- 
tions." (Baker,  District  Judge.)  National  Harrow  Co.  v. 
Quick,  67  Fed.  130,  132.    (C.  C.  Indiana,  1895.) 

§  484.  General  Iniquitous  Conduct. 

"The  maxim  that  he  who  comes  into  equity  must  come 
with  clean  hands  has  its  limitations.  It  does  not  apply  to 
every  unconscientious  act  or  inequitable  conduct  on  the 
])art  of  the  complainants.  The  inequity  which  deprives 
a  suitor  of  a  right  to  justice  in  a  court  of  equity  is  not 
general  iniquitous  conduct,  unconnected  with  the  act  of 
the  defendant  which  the  complaining  party  states  as  his 
ground  or  cause  of  action,  but  it  must  be  evil  practice  or 
wrong  conduct  in  the  particular  matter  or  transaction  in 
respect  to  which  judicial  i)rotection  or  redress  is  sought." 


Sherman  Law  as  Defense  to  Actions        223 

(Hazel,  District  Judge.)  Delaware,  L.  &  W.  R.  Co.  v. 
Frank,  110  Fed.  659,  696  (C.  C— W.  D.  New  York,  1901), 
quoting  from  Insurance  Co.  v.  Clunie,  88  Fed.  170. 

"  In  suits  at  law,  it  is  doubtless  true,  as  a  general  proposi- 
tion, that  a  wrongdoer  will  not  be  permitted  to  dispute 
the  legal  title  of  one  in  possession  of  money  or  property  by 
showing  that  the  title  thereto  was  unlawfull}^  acquired, 
or  that  the  owTier  intends  to  apply  it  to  an  unlawful  use. 
I  have  strong  doubts  whether  this  rule  ought  to  apply  to 
a  suit  in  equity,  where  nothing  but  clean  hands  and  a 
good  conscience  will  move  the  court  to  act.  The  combina- 
tion represented  by  the  complainant  is  not  illegal  in  any 
other  sense,  except  that  the  law  will  not  lend  its  aid  to 
the  accomplishment  of  its  purposes."  (Baker,  District 
Judge.)  National  Harrow  Co.  v.  Quick,  67  Fed.  130,  132. 
(C.  C.  Indiana,  1895.) 

"The  fact  that  one  party  to  a  contract  is  engaged  in 
illegal  acts  will  not,  at  common  law,  avail  the  other  party 
as  a  defense  to  the  enforcement  of  a  contract  in  itself 
legal."  (KoHLSAAT,  District  Judge.)  Union  Sewer  Pipe 
Co.  V.  Connelly,  99  Fed.  354.  (C.  C— N.  D.  Illinois,  N.  D. 
1900.) 

§  485.  Test  is  Whether  Illegality  is  Involved. 

"The  test,  whether  a  demand  connected  with  an  illegal 
transaction  is  capable  of  being  enforced  at  law,  is  whether 
the  plaintiff  requires  the  aid  of  the  illegal  transaction  to 
establish  his  case.  If  he  cannot  open  his  case,  ^vithout 
showing  that  he  has  broken  the  law,  a  court  will  not  assist 
him.  But  if  he  does  not  claim  through  the  medium  of  the 
illegal  transaction,  but  upon  a  new  contract  bottomed  on 
independent  consideration,  he  may  recover."  (Lacombe, 
Circuit  Judge.)  The  Charles  E.  Wiswall,^  Fed.  671,  674. 
(C.  C.  A.  Second  Circuit,  1898.) 


224  Manual  of  the  Sherman  Law 

§  486.  Contract  not  Tainted  with  Illegality. 

"The  principle  is  well  recognized  by  the  authorities 
that  a  promise  remotely  connected  with  an  illegal  act, 
and  founded  on  a  new  consideration,  is  not  tainted  with 
the  illegality,  although  it  was  known  to  the  party  to  whom 
the  promise  was  made,  and  although  he  was  the  contriver 
and  conductor  of  the  illegal  act."  (Lacombe,  Circuit 
Judge.)  The  Charles  E.  Wiswall,  86  Fed.  671,  674.  (C.  C. 
A.  Second  Circuit,  1898.) 

"The  defendant's  proposition  is  that  a  person  who  has 
given  work,  labor,  and  services  to  another,  upon  that 
other's  emploj^ment,  may  not  recover  their  fair  and  rea- 
sonable value  if,  during  the  time  that  he  rendered  such 
services,  he  had  been  engaged  with  other  men  in  like  em- 
ployment with  himself  in  a  combination  to  charge  for 
such  services  as  any  of  them  might  render  according  to 
some  scale  agreed  upon  by  them.  We  know  of  no  principle 
of  law  which  calls  for  the  adoption  of  such  a  rule,  and  are 
referred  to  no  authorities  which  support  it."  (Lacombe, 
Circuit  Judge.)  The  Charles  E.  Wiswall,  86  Fed.  671, 
673  (C.  C.  A  Second  Circuit,  1898.) 

"One  who  voluntarily  and  knowingly  deals  with  the 
parties  so  combined  (into  an  illegal  combination)  cannot, 
on  the  one  hand  take  the  benefit  of  his  bargain,  and,  on 
the  other,  have  a  right  of  action  against  the  seller  for  the 
money  paid,  or  any  part  of  it,  either  upon  the  ground  that 
the  combination  was  illegal,  or  that  its  prices  were  un- 
reasonable." (Seaman,  District  Judge.)  Dennehy  v. 
M' Nulla,  86  Fed.  825.    (C.  C.  A.  Seventh  Circuit,  1898.) 

Where  the  proof  shows  conclusively  that  during  the 
summer  of  1895,  certain  tugs  mfmtioned  in  the  libel  ren- 
dered services  to  the  claimant's  dredge  in  sums  aggre- 
gating several  hundred  dollars,  the  claimant  cannot  avoid 
])ayment  for  such  services  thus  requested  and  accepted 


Sherman  Law  as  Defense  to  Actions        225 

by  him,  upon  the  ground  that  the  tug  owners  were  mem- 
bers of  an  association  which  was  illegal  and  void  under  the 
Sherman  Law.  "  He  should  not  be  permitted  to  repudiate 
his  just  debts  to  the  individual  tugs  because  their  asso- 
ciation was  illegal.  Having  asked  for  their  services,  and 
accepted  the  benefit  thereof,  he  should  pay."  (Coxe, 
District  Judge.)  The  Charles  E.  Wiswall,  74  Fed.  802 
(D.  C— N.  D.  New  York,  1896);  The  Charles  Wiswall, 
86  Fed.  671,  672-673.    (C.  C.  A.  Second  Circuit,  1898.) 

§  487.  Patent  and  Trade-Mark  Suits. 

Unless  something  prohibited  by  the  Act  is  directly  in- 
volved as  a  necessary  part  of  the  cause  of  action  brought 
for  infringement  of  a  patent  or  a  trade-mark,  the  mere 
fact  that  the  plaintiff  is  operating  in  restraint  of  trade  or 
is  a  monopoly  forbidden  by  the  Act  is  no  defense.  Nat^l 
Harrow  Co.  v.  Hench,  84  Fed.  226,  227-228  (C.  C— N.  D. 
New  York,  1898) ;  National  Folding  Box  &  P.  Co.  v.  Robert- 
son, 99  Fed.  985  (C.  C.  Connecticut,  1901);  Otis  Elevator 
Co.  V.  Geiger,  107  Fed.  131,  133-134  (C.  C.  Kentucky, 
1901);  Gen.  Elec.  Co.  v.  Wise,  119  Fed.  922,  924  (C.  C— 
N.  D.  New  York,  1903) ;  A^.  W.  Coiisol.  Mill.  Co.  v.  Callam 
it  Son,  177  Fed.  786,  788  (C.  C— E.  D.  Michigan,  N.  D., 
1910) ;  Connolly  v.  Union  Sewer  Pipe  Co.,  184  U.  S.  540,  546 
(1902). 

§  488.  As  a  General  Rule,  Defense  of  Act  must  be  Specially 
Pleaded. 

In  order  that  a  defendant  may  avail  himself  of  the  fact 
that  the  contract  declared  on  is  in  violation  of  the  Sher- 
man Law,  he  should  ordinarily  specially  plead  this  statute 
in  defense.  A^.  Y.  Bank  Note  Co.  v.  Kidder  Pi-ess  Mfg.  Co., 
192  Mass.  391,  404.    (Mass.  Supreme  Court,  1906.) 

Should,  however,  such  illegality  appear  as  a  matter  of 


226  Manual  of  the  Sherman  Law 

law  from  the  pleadings,  the  face  of  the  contract  in  suit, 
or  from  the  confessed  facts  in  the  case,  the  failure  of  the 
defendant  to  plead  properly  does  not  waive  the  objection, 
and  the  suit  ma}^  nevertheless  be  dismissed  by  the  court, 
the  underlying  principle  being  that  the  law  will  not  lend 
its  support  to  a  claim  founded  upon  its  violation,  and 
that  the  defense  is  allowed  not  for  the  sake  of  the  de- 
fendant, but  of  the  law  itself.  Carter-Crume  Co.  v.  Peur- 
rung,  86  Fed.  439,  440-441.  (C.  C.  A.  Sixth  Circuit, 
1898.) 

§  489.  Lateness  of  Presentation  of  Defense. 

A  writ  of  error  from  the  Supreme  Court  of  the  United 
States  to  the  highest  court  of  a  state  was  properly  allowed 
where  it  appears  that  the  Federal  question  was  raised  and 
necessarily  decided  by  such  state  court.  If  the  state  court 
passes  on  the  question  it  is  sufficient,  the  matter  of  lateness 
of  presentation  being  solely  one  for  the  state  court  to 
decide  under  local  procedure.  Cincinnati  Packet  Co.  v. 
Bay,  220  U.  S.  179,  182  (1906). 


CHAPTER  XVII 

PATENTS,   COPYRIGHTS,   TRADE-MARKS  AND  TRADE  SECRETS 

§  490.  Patent  Franchise  Includes  Merely  Right  to  Exclude. 

"The  franchise  which  the  patent  grants,  consists  alto- 
gether in  the  right  to  exclude  every  one  from  making,  us- 
ing, or  vending  the  thing  patented  without  the  permission 
of  the  patentee.  This  is  all  that  he  obtains  by  the  patent." 
(Mr.  Chief  Justice  Taney.)  Bloomer  v.  McQuewan  (1852), 
14  Howard,  539,  549  (1852). 

§  491.  Three  Exclusive  Rights  Embraced. 

The  monopoly  conferred  by  a  patent  includes  the  right 
to  exclude  others  from  making,  the  right  to  exclude  others 
from  selling  and  the  right  to  exclude  others  from  using 
the  invention  covered  by  the  patent;  and  these  are  sep- 
arable and  substantial  rights.  Henry  v.  Dick  Co.,  224 
U.  S.  1,  27-28  (1911). 

§  492.  Dual  Nature  of  Exclusive  Rights  of  Patentee. 

The  rights  of  an  inventor  are  dual  in  character.  "A 
patent  does  not  confer  even  the  right  to  use  an  inven- 
tion. The  inventor  had  that  right  before.  It  is  merely 
an  incorporeal  right  to  exclude  others  from  using  the 
invention  throughout  the  United  States  conferred  by 
the  government  upon  compliance  with  certain  require- 
ments, and  is  transferable  only  according  to  the  laws  of 
its   creation,   which   the   state   statutes   cannot   effect." 

227 


228  Manual  of  the  Sherman  Law 

(Wheeler,  District  Judge.)     Jewett  v.  Atwood  Suspender 
Co.,  100  Fed.  647,  648.    (C.  C— Vermont,  1900.J 

§  493.  Patentee  has  no  Affirmative  Right  Under  a  Patent  to 
Make,  Use  and  Sell. 

"The  right  to  make,  use  and  sell  an  invented  article 
is  not  derived  from  the  patent  law.  This  right  existed  be- 
fore and  without  the  passage  of  the  law  and  was  always 
the  right  of  an  inventor.  The  act  secured  to  the  inventor 
the  exclusive  right  to  make,  use  and  vend  the  thing  pat- 
ented, and  consequently  to  prevent  others  from  exercising 
like  privileges  without  the  consent  of  the  patentee."  {Mr. 
Justice  Day.)  Bauer  v.  O'Donnell,  229  U.  S.  1,  10  (1912); 
Continental  Paper  Bag  Co.  v.  Eastern  Paper  Bag  Co.,  210 
U.  S.  405,  425  (1908). 

"B}^  the  terms  of  the  patent  he  (the  patentee)  has  the 
exclusive  right  to  make,  use  and  \'end.  The  right  to  make, 
use  and  vend  he  has  Avithout  the  grant  of  Letters  Patent. 
When  we  say  that  a  patent  grants  an  'exclusive  right,'  wc 
do  not  mean  that  the  right  to  make,  use  and  vend  is 
granted,  but  only  that  the  patented,  existing  right  is  made 
exclusive  by  the  grant."  (Brown,  District  Judge.)  Blount 
Mfg.  Co.  V.  Yale  &  Towne  Mfg.  Co.,  166  Fed.  555,  558. 
(C.  C.  Mass.  1909). 

§  494.  Purpose  and  Scope  of  Patent  Statute. 

The  patent  statute  "was  ]:)assed  for  the  purpose  of  en- 
couraging and  promoting  useful  inventions  and  improve- 
ments by  the  protection  and  stimulation  thereby  given  to 
inventive  genius,  and  was  intended  to  secure  to  the  public 
after  the  lapse  of  the  exclusive  privileges  granted,  the 
benefit  of  such  inventions  and  improvements."  While  a 
liberal  construction  of  the  statute,  however,  is  to  be  fa- 
vored, "care  should  be  taken  not  to  extend  by  judicial 


Patents,  Copyrights,  Trade-marks,  etc.      229 

construction  the  rights  and  privileges  which  it  was  the 
I)urpose  of  Congress  to  bestow."  (Mr.  Justice  Day.) 
Bauer  v.  O'DonncU,  229  U.  S.  1,  10  (1913). 

§  495.  Use  for  Unlawful  Purpose  not  Authorized. 

"The  conclusion  drawn  from  the  examination  of  these 
cases  is  that  the  patent  hiws  give  the  patentee  a  monopoly 
in  his  invention,  and  afford  him  protection  in  its  proper 
and  legitimate  employment;  but  that  they  do  not  authorize 
him  to  employ  it  for  a  purpose  or  in  a  manner  that  may  be 
for])idden  to  all  other  persons  in  the  use  of  their  un- 
patented property  or  discoveries."  (Wales,  J.)  State  v. 
Delaware  etc.  Co.,  47  Fed.  633,  636.  (C.  C.  Delaware, 
1891.) 

§  496.  No  Right  Given  to  Sell  Indulgences. 

"  A  patent  is  a  grant  of  a  right  to  exclude  all  others  from 
making,  using  and  selling  the  invention  covered  by  it.  It 
does  not  give  a  right  to  the  patentee  to  sell  indulgences  to 
violate  the  law  of  the  land,  be  it  the  Sherman  Act  or 
another."  (Rose,  District  Judge.)  U.  S.  v.  Standard 
Sanitary  Mfg.  Co.,  191  Fed.  172,  190.  (C.  C.  Maryland, 
1911.) 

§  497.  Patents  do  not  Confer  License  Against  Prohibition 
of  Law. 

"Rights  conferred  by  patents  are  indeed  very  definite 
and  extensive,  but  they  do  not  give  any  more  than  other 
rights  an  universal  license  against  ix)sitive  prohibitions. 
The  Sherman  law  is  a  limitation  of  rights,  rights  which 
may  be  pushed  to  evil  consequences  and  therefore  re- 
strained." {Mr.  Justice  McKenna.)  Standard  Sanitary 
Mfg.  Co.  V.  U.  S.,  226  U.  S.  20,  49.  Quoted  with  approval 
in  Straus  v.  Am.  Publishers'  Ass'n,  231  U.  S.  222,  234 
(1913.) 


230  Manual  of  the  Sherman  Law 

§  498.  Patent   Cannot  Extend  Power   and   Create   Further 
Monopolies. 

The  provisions  of  the  Sherman  Act  have  no  further 
operation  in  respect  to  a  patentee  than  to  prevent  him 
from  extending  his  pov/er  to  the  creation  of  other  and 
further  restraints  or  monopohes  prohibited  by  the  Act. 
Such  monopolies  cannot  be  said  to  be  necessarily  incident 
to  the  full  exercise  of  the  right  secured  by  the  patent. 
Opinion  of  Justices  of  Massachusetts  Supreme  Court  re- 
garding the  Proposed  Machinery  Bill  of  1907.  Vol.  193, 
Mass.  605,  610. 

§  499.  Sherman  Law  Discloses  no  Intent  to  Exempt  Pat- 
entees. 

"  No  word  or  phrase  in  the  Sherman  anti-trust  act  reveals 
an  intent  to  exempt  the  owners  of  patents  from  its  sweep- 
ing provisions  against  monopolistic  combination.  We 
are  unable  to  perceive  any  underlying  reason  for  suppos- 
ing that  by  implication  growing  out  of  economic  or  busi- 
ness conditions  such  an  exemption  was  intended.  There 
appears  to  be  no  inherent  natural  distinction  between 
owners  of  patents  and  owners  of  oil  which  would  justify 
the  application  of  the  statute  to  one  and  not  to  th(^  other. 
The  conclusion  seems  to  follow  that  the  comprehensive 
condemnation  of  the  act  against  every  person  who  monop- 
olizes interstate  commerce  by  combination  with  others 
includes  holders  of  patents  as  well  as  others."  (Rugg, 
Chief  Justice.)  United  Shoe  Machinery  Co.  v.  La 
ChopeUe,  212  Mass.  467,  482-483.  (Mass.  Supreme 
Court,  1912.) 

§  500.  Patentee  may  not  Restrain  Trade  Outside  of  Patent. 

"A  i)atentee  who  monopolizes  his  invention  breaks  no 
law.    He  who  uses  his  i)roperty  right  to  exclude  others  from 


Patents,  Copyrights,  Tuade-marks,  etc.      231 

the  making,  selling,  or  using  his  invention,  for  the  purpose 
and  with  the  effect  of  making  a  combination  to  restrain 
trade  in  something  from  which  his  patent  gives  him  no 
right  to  exclude  others,  does  break  the  law.  He  breaks  it 
precisely  as  the  individual  defendants  in  the  Standard 
Oil  and  American  Tobacco  Companies  broke  it."  (Hose, 
District  Judge.)  U.  S.  v.  Standard  Sanitary  Mfg.  Co.,  191 
Fed.  172,  190.    (C.  C.  Maryland,  1911.) 

§  501,  Patentee  in  Spite  of  Sherman  Law  may  Monopolize 
Thing  Invented. 
"The  patentee  ma}^,  in  spite  of  that  law,  monopohze 
for  the  term  of  his  patent  the  thing  which  he  or  his  assignee 
invented.  Neither  at  common  law  nor  in  this  country  by 
statute  has  he  ever  had  a  right  to  monopolize  anything 
else.  As  to  everything  not  validly  claimed  in  his  patent, 
he  is  as  other  men.  If  by  the  common  law  or  the  statutes 
of  the  state  or  by  the  enactments  of  Congress  men  are 
forbidden  to  restrain  trade  or  to  monopolize  it,  a  patentee 
may  not  restrain  trade  or  attempt  to  monopolize  it  in 
anything  except  that  w^hich  is  covered  by  his  patent." 
(Rose,  District  Judge.)  U.  S.  v.  Standard  Sanitary  Mfg. 
Co.,  191  Fed.  172, 190.    (C.  C.  Maryland,  1911.) 

§  602.  Limitation  upon  a  Patentee's  Contractual  Power. 

"We  are  not  at  all  prepared  to  say  that  there  are  no 
limitations  upon  a  patentee's  power  of  contract  with  ref- 
erence to  the  use  of  his  invention  by  others.  The  property 
right  of  a  patentee  is,  after  all,  but  a  property  right,  and 
subject,  as  is  all  other  property  to  the  general  law  of  the 
land.  We  may  also  concede  that  contracts  respecting  the 
use  of  inventions  and  discoveries  are,  like  all  other  con- 
tracts, subject  to  the  limitations  imposed  by  definite 
principles  of  pubhc  poUcy."    (Lurton,  Circuit  Judge.) 


232  Manual  of  the  Sherman  Law 

Heaion-Peninsular  Button  Fastener  Co.  v.  Eureka  Specialty 
Co.,  77  Fed.  288,  292,  293  (C.  C.  A.  1896). 

§  503.  Right  to  Exclude  Exercised  only  by  Infringement 
Suits. 
The  patentee's  right  to  exclude  others  from  making,  us- 
ing and  selling  his  invention  can  be  exercised  in  no  other 
way  than  by  bringing  suits  for  infringement.  The  pat- 
entee has  no  sanction  under  the  patent  law  to  forcibly 
exclude  infringers  in  any  other  way.  U.  S.  v.  Patterson, 
205  Fed.  292,  297.    (D.  C— S.  D.  Ohio,  W.  D.  1913.) 

§  504.  States  in  Exercise  of  Police  Powers,  etc.,  may  Prevent 
Sales  of  Patented  Articles. 

The  sale  of  patented  articles  "may  be  prevented  when 
the  use  of  such  articles  may  be  subject,  within  the  several 
states,  to  the  control  which  they  may  respectively  imi30se 
in  the  legitimate  exercise  of  their  powers  over  their  purely 
domestic  affairs,  whether  of  internal  commerce  or  of  poUce 
regulation."  {Mr.  Justice  Peckham.)  Bement  v.  Nat'l 
Harrow  Co.,  186  U.  S.  70,  90  (1902). 

§  505.  Patent  Rights  in  Channels  of  Commerce. 

"There  is  no  peculiar  sanctity  hovering  over  or  attach- 
ing to  the  ownership  of  a  patent.  It  is  simply  a  property 
right,  to  be  protected  as  such.  Starting  from  that  as  a 
basis,  while  every  property  owner  may  determine  for  him- 
self to  what  he  will  devote  his  property,  yet  the  moment 
he  puts  that  propert}^  into  what  I  ])erhaps  may,  for  a  lack 
of  a  better  expression,  define  as  the  channels  of  commerce, 
that  moment  he  subjects  that  property  to  the  laws  which 
control  conunercial  transactions."  (Brewer,  J.)  Stale 
of  Missouri  V.  Bell  Telephone  Co.,  23  Fed.  539,  540.  (C. 
C\— E.  D.  Missouri,  1885.) 


Patents,  Copyrights,  Trade-mahks,  etc.      233 

§  506.  Patented  Articles  not  Outside  of  Act. 

Patented  articles  are  aji  important  factor  in  interstate 
commerce  and  are  subject  to  all  restrictions  imposed  by 
law  upon  interstate  traders.  Blount  Mfg.  Co.  v.  Yale  & 
Toivne  Mf<j.  Co.,  IGG  Fed.  555,  559.    (C.  C.  Mass.  1909.) 

§  507.  Prohibited  Monopoly  of  Patented  Articles. 

"  It  seems  quite  clear  that  an  agreement  in  restraint  of 
trade,  though  it  relates  to  patented  articles,  may  tend  to 
create  a  monopoly  which  is  different  from  that  conferred 
by  grants  of  letters  patent."  (Brown,  District  Judge.) 
Blount  Mfg.  Co.  v.  Yale  &  Toivne  Mfg.  Co.,  166  Fed.  555, 
562  (C.  C.  Mass.  1909);  Standard  Sanitary  Mfg.  Co.  v. 
U.  S.,  226  U.  S.  20,  48-49  (1912). 

§  508.  Contra :  No  Prohibited  Monopoly  of  Patented  Articles. 

"The  Sherman  Law  contains  no  reference  to  the  patent 
law.  Each  was  passed  under  a  separate  and  direct  con- 
stitutional grant  of  power.  .  .  .  The  necessary  implica- 
tion is  that  not  one  iota  was  taken  away  from  the  patent 
law,  and  that  patented  articles  unless  or  until  they  are 
released  from  the  dominion  of  monopoly,  are  not  articles 
of  trade  or  commerce  among  the  several  states."  (Baker, 
Circuit  Judge.)  Rubber  Tire  Wheel  Co.  v.  Milwaukee  R. 
W.  Co.,  154  Fed.  358,  362.  (C.  C.  A.  Seventh  Circuit, 
1907.) 

§  509.  Contract  to  Restrain  Patentee's  Own  Trade. 

"An  agreement  whereby  a  patentee  agrees  to  restrain 
his  own  trade  under  his  patent  may  be  as  much  within  the 
prohibition  of  the  Sherman  Act  as  an}^  other  agreement 
of  the  same  character."  (Brown,  District  Judge.)  Blount 
Mfg.  Co.  V.  Yale  &  Towne  Mfg.  Co.,  166  Fed.  555,  560. 
(C.  C.  Mass.  1909.) 


234  Manual  of  the  Sherman  Law 

§  510.  Patentee  has  no  Right  to  Restrain  Himself. 

While  a  i)ateiitce  by  his  patent  is  given  tlie  right  to  re- 
strain or  exclude  others  from  his  patent  domain,  he  is 
given  no  right  or  privilege  to  restrain  himself.  Blount 
Mfg.  Co.  v.  Yale  &  Towne  Mfg.  Co.,  166  Fed.  555,  558. 
(C.  C.  Mass.  1909.) 

§  511.  Contract  of  Non-Use  Under  Patent. 

"Ownership  of  a  patent  involves  no  obligation  to  use 
nor  does  ownership  of  any  other  propert3\  Non-use 
ordinarily  violates  no  law;  but  contracting  with  another, 
putting  it  in  the  power  of  another  to  compel  one  not  to  use, 
is  a  contract  in  restraint  of  trade,  designed  for  the  purpose 
of  suppressing  competition."  (Brown,  District  Judge.) 
Blount  Mfg.  Co.  v.  Yale  &  Towne  Mfg.  Co.,  166  Fed.  555, 
560.    (C.  C.  Mass.  1909.) 

§  512.  Combination  of  Distinct  Patent  Owners  Restraining 
Trade. 

"Patents  confer  a  monopoly  as  respects  the  property 
covered  by  them,  but  they  confer  no  right  upon  the  owners 
of  several  distinct  patents  to  combine  for  the  purpose  of 
restraining  competition  and  trade."  (Butler,  Distnct 
Judge.)  National  Harrow  Co.  v.  Hench,  83  Fed.  36,  38. 
(C.  C.  A.  Third  Circuit,  1897) ;  Bohbs-Mcrrill  Co.  v.  Stram, 
139  Fed.  155,  192  (C.  C— S.  D.  New  York,  1905),  and 
cases  cited. 

"The  fact  that  the  property  involved  is  covered  by 
letters  patent  is  urged  as  a  justification;  but  we  do  not 
see  how  any  importance  can  be  attributed  to  this  fact. 
Patents  confer  a  monopoly  as  respects  the  property  cov- 
ered by  them,  but  they  confer  no  right  upon  the  owners  of 
several  distinct  patents  to  combine  for  the  purpose  of  re- 
straining competition  and  trade.    Patented  property  does 


Patents,  Copyhioiits,  Trade-mauks,  etc.      235 

not  differ  in  this  respect  from  any  other."  (Butler,  Dis- 
trict Judge.)  National  Harrow  Co.  v.  Hench,  83  Fed.  36, 
38.    (C.  C.  A.  Third  Circuit,  1897.) 

§  513.  Combination  of  Owners  of  Independent  Patents. 

"Combinations  between  owners  of  independent  patents, 
whereby,  as  a  part  of  a  phm  to  monopoHze  the  commercial 
field,  competition  is  ehminated,  are  within  the  Sherman 
Act,  for  the  reason  that  the  restraint  of  trade  or  monopoly 
arises  from  combination  and  not  from  the  exercise  of 
rights  granted  by  letters  patent."  (Brown,  District 
Judge.)  Blount  Mfg.  Co.  v.  Yale  &  Towne  Mfg.  Co.,  166 
Fed.  555,  562.    (C.  C.  Mass.  1909.) 

"  It  is  true  that  a  patentee  has  the  exclusive  control  of 
his  invention  during  the  life  of  the  patent.  He  may  prac- 
tice the  invention  or  not,  as  he  sees  fit,  and  he  may  grant 
to  others  licenses  upon  his  own  terms.  But  where,  as 
was  the  case  here,  a  large  number  of  independent  manu- 
facturing concerns  are  engaged  in  making  and  selling,  un- 
der different  patents  and  in  various  forms,  an  extensively 
used  article,  competition  between  them  is  the  natural  and 
inevitable  result,  and  thereby  the  public  interest  is  pro- 
moted. Therefore,  a  combination  between  such  manu- 
facturers, which  imposes  a  widespread  restraint  upon  the 
trade,  and  destroys  competition,  is  as  injurious  to  the 
community,  and  as  obnoxious  to  sound  public  poUcy,  as 
if  the  confederates  were  dealing  in  unpatented  articles." 
(AcHEsoN,  Circuit  Judge.)  National  Harrow  Co.  v.  Hench, 
76  Fed.  667,  669-670.    (C.  C— E.  D.  Penn.  1896.) 

§  514.  Contracts  Creating  such  a  Combination  are  Within 
Sherman  Law. 
"As  by  the  terms  of  the  contracts  under  consideration 
the  owners  of  distinct  patents  each  agreed  to  restrain  its 


236  Manual  of  the  Sherman  Law 

own  interstate  trade,  I  am  of  the  opinion  that  the  con- 
tracts are  in  these  particulars  obnoxious  to  the  Sherman 
Anti-Trust  Act."  (Brown,  District  Judge.)  Blount  Mfg. 
Co.  V.  Yale  &  Towne  Mfg.  Co.,  166  Fed.  555,  562.  (C.  C. 
Mass.  1909.) 

§  515.  Agreements  of  Independent  Patentees  not  to  Com- 
pete. 

"A  contract  whereby  the  manufacturers  of  two  inde- 
pendent patented  inventions  agree  not  to  compete  m  the 
same  commercial  field  depnves  the  public  of  the  benefit  of 
competition,  and  creates  a  restraint  of  trade  which  results, 
not  from  the  granting  of  letters  patent,  but  from  agree- 
ment." (Brown,  District  Judge.)  Blount  Mfg.  Co.  v. 
Yale  &  Towne  Mfg.  Co.,  166  Fed.  555,  557.  (C.  C.  Mass. 
1909.) 

§  616.  Combination  Through  Use  of  Exclusive  License  Con- 
tracts. 

The  cases  involving  the  National  Harrow  Company  in- 
dicate the  extent  to  which  the  courts  have  been  willing 
to  go  relative  to  combinations  which  have  been  formed 
under  the  cover  of  letters  patent.  This  company  was 
formed  by  various  competing  concerns,  who  were  inde- 
pendent manufacturers  of  spring-toothed  harrows,  and 
each  of  whom  was  the  owner  of  letters  patent  covering  in 
whole  or  in  part  the  particular  product  manufactured  by 
it.  Upon  the  assignment  of  all  of  said  letters  patent  to  the 
said  National  Harrow  Company,  its  stock  was  thereupon 
distributed  among  said  (!oncerns,  and  an  exclusive  license 
was  given  to  each  restricted  to  its  particular  type  of  manu- 
facture. Uniform  terms  and  conditions  were  imposed  in 
each  of  said  licenses,  and  each  maiiufactui'er  was  l)ound  to 
sell  solely  its  said  harrows  at   the  ])rices  and  upon  the 


Patents,  Copyrights,  Tkade-marks,  p:tc.      237 

terms  fixed  at  the  will  of  the  licensor.  In  a  number  of 
cases,  it  was  held  that  an  unlawful  combination  was 
thereb\^  effected.  National  Harrow  Co.  v.  Hench,  83  Fed. 
36,  37-39  (C.  C.  A.  Third  Circuit,  1897)  affirming  National 
Harrow  Co.  v.  Hench,  76  Fed.  667,  668,  670.  (C.  C— E.  D. 
Penn.  1896.)  See  also  to  same  effect,  National  Harrow  Co. 
V.  Quick,  67  Fed.  130,  131-132  (C.  C.  Indiana,  1895); 
National  Harrow  Co.  v.  Hench,  84  Fed.  226,  227-228. 
(C.  C— N.  D.  New  York,  1898.)  For  contra  doctrine 
see  U.  S.  Consolidated  S.  R.  Co.  v.  Griffin  &  Skelley 
Co.,  126  Fed.  364  (C.  C.  A.  Ninth  Circuit,  1903);  Otis 
Elevator  Co.  v.  Geiger,  107  Fed.  131,  132-134.  (C.  C. 
Kentucky,  1901.) 

"It  will  bo  ])erceived  that  the  corporation  through  whose 
instrumentality  the  purposes  of  the  combination  are  ef- 
fected is  simply  clothed  with  the  legal  title  to  the  assigned 
patents,  while  the  several  assignors  are  invested  with  the 
exclusive  right  to  manufacture  and  sell  their  old  style  of 
harrows  under  their  own  patents;  but  all  of  them  must  sell 
at  uniform  prices  and  upon  the  same  terms,  without  re- 
spect to  cost  or  the  merits  of  their  respective  styles  of 
harrows,  and  all  the  members  of  the  combination  are 
strictly  forbidden  to  manufacture  or  sell  any  other  style 
or  kind  of  float  spring-tooth  harrows  than  they  are  thus 
licensed  to  make  and  sell.  Now,  it  is  quite  evident  to  me, 
as  well  by  the  papers  themselves  as  from  the  testimony  of 
witnesses,  that  this  scheme  was  devised  for  the  purpose  of 
regulating  and  enhancing  prices  for  float  spring-tooth  har- 
rows, and  controlling  the  manufacture  thereof  throughout 
the  whole  country,  and  that  the  combination  especially 
by  force  of  the  numbers  engaged  therein  tends  to  stifle  all 
competition  in  an  important  branch  of  business."  (Ache- 
son,  Circuit  Judge.)  National  Harrow  Co.  v.  Hench,  76 
Fed.  667,  669.    (C.  C— E.  D.  Penn.  1896.) 


238  Manual  of  the  Sherman  Law 

§  617.  First  Section  Applies  to  Combination  to  Restrain 
Trade  in  Patented  Articles. 
"  It  seems  to  this  court  impossible  to  hold  that  this  sec- 
tion (the  first  section)  of  the  Act  does  not  apply  to  a  com- 
l^ination  of  patentees  to  restrain  trade  and  commerce  in 
])atented  articles  made  under  their  patents  as  much  as  to 
such  a  combination  made  by  dealers  in  other  articles  of 
commerce."  (Ray,  District  Judge.)  Bohhs-Merrill  Co.  v. 
Straus,  139  Fed.  155,  192.  (C.  C— S.  D.  New  York, 
1905.) 

§  518.  Combination  of  Non-Competing  Patent  Owners  not 
Prohibited. 

A  corporation  formed  l\v  the  amalgamation  of  three 
non-competing  companies  each  engaged  in  the  manu- 
facture and  sale  or  lease  of  patented  shoe  machinery  dif- 
ferent in  character  and  purpose  from  that  manufactured 
by  the  others,  is  not  a  combination  within  the  penalties 
of  the  Sherman  Act.  "On  the  face  of  it  the  combination 
was  simpl}^  an  effort  after  greater  efficiency.  .  .  .  The 
disintegration  aimed  at  by  the  statute  does  not  extend  to 
reducing  all  manufacture  to  isolated  units  of  the  lowest 
degree."  {Mr.  Justice  Holmes.)  United  States  v.  Wins- 
low,  227  U.  S.  202,  215-217  (1913). 

§  519.  Patents  Constituting  Single  Mechanical  Evolution. 

Where  certain  patents  as  an  entirety  constitute^  a  single 
mechanical  evolution,  and  are  in  no  sense  competitive 
patents,  the  concentration  of  said  patents  under  one  con- 
trol is  in  no  sense  a  combination  to  prevent  competition. 
(Condensed  from  Concurring  Opinion  of  Grosscup,  Cir- 
cuit Judge.)  Indiana  Mfg.  Co.  v.  J.  I.  Case  Threshing 
Machine  Co.,  154  Fed.  365,  372.  (C.  C.  A.  Seventh  Cir- 
cuit, 1907.) 


Patents,  Copyrights,  Trade-marks,  etc.      239 

§  520.  Multitude  of  Identical  Agreements. 

Apart  from  patents  and  copyrights,  the  reasons  at 
common  law  which  might  uphold  covenants  restricting" 
the  liberty  of  a  single  buyer  might  prove  quite  inadequate 
when  there  are  a  multitude  of  identical  agreements.  The 
single  covenant  might  in  no  way  affect  the  public  interest, 
when  a  large  number  might.  Where  the  general  purpose 
of  each  separate  contract  is  the  regulation  of  prices  and 
sales  by  one  concern  and  the  agreement  of  each  covenantee 
is  to  sell  only  at  the  prices  dictated  by  such  concern,  a 
general  scheme  of  monopoly  or  restraint  of  trade  is  in- 
volved. John  D.  Park  &  Sons  Co.  v.  Hartman,  153  Fed. 
24,  41.    (C.  C.  A.  Sixth  Circuit,  1907.) 

Even  where  the  question  of  patent  monopoly  is  in- 
volved, however,  a  system  of  uniform  trade  agreements 
based  upon  the  use  of  a  patented  invention  which  tran- 
scends what  is  necessary  to  protect  such  monopoly,  and 
which  practical!}^  controls  the  output  and  dictates  the 
prices  from  producer  to  consumer  on  nearly  all  sales  of 
sanitary  enameled  iron-ware  throughout  the  country  is 
illegal  and  void.  Standard  Sanitary  Mfg.  Co.  v.  U.  S.,  226 
U.  S.  20,  47^8  (1912). 

§  521.  Assignment  an  Integral  Part  of  Scheme. 

Where  an  assignment  of  letters  patent  is  made  in  pur- 
suance of  an  unlawful  combination  to  enhance  prices  and 
prevent  competition,  and  is  an  integral  part  of  a  scheme 
by  the  use  of  similar  assignments  to  create  a  monopoly,  the 
assignor  in  the  last  analysis  retaining  the  right  to  make  and 
sell  under  the  patents  so  assigned,  such  assignment  is  in- 
valid and  the  court  will  leave  the  parties  thereto  where  it 
finds  them,  denying  affirmative  relief  to  one  as  against  the 
other.  National  Harrow  Co.  v.  Hench,  84  Fed.  226,  227- 
228.    (C.  C— N.  D.  New  York,  1898.)  But  see,  U.  S.  Con- 


240  Manual  of  the  Sherman  Law 

solidated  S.  R.  Co.  v.  Griffin  &  Skelley  Co.,  126  Fed.  364 
(C.  C.  A.  Ninth  Circuit,  1903),  in  which  case,  however, 
the  court  appears  to  misapprehend  the  scope  of  the  deci- 
sion in  Bement  v.  National  Harrow  Co.,  186  U.  S.  70, 
where  the  court  expressly  held  that  no  question  of  com- 
bination in  restraint  of  trade  was  involved. 

§  622.  Patents  Cannot  Cover  Violations  of  Law. 

"Patents  and  patent  rights  cannot  he  made  a  cover  for 
a  violation  of  law.  .  .  .  But  patents  are  not  so  used  when 
the  rights  conferred  upon  them  by  law  are  onl}'  exercised." 
{Mr.  Justice  McKenna.)  Virtue  v.  Creamery  Package  Co., 
227  U.  S.  8,  32-33  (1913). 

§  523.  Grant  of  Patent  does  not  Sanction  acts  of  Violence. 

A  grant  of  letters  patent  does  not  authorize  or  sanction 
acts  of  violence  of  the  patentee  in  the  protection  of  his 
patent  right,  acts  of  violence  against  the  claimed  infring- 
ing article,  or  the  business  of  infringers.  U.  S.  v.  Patterson, 
205  Fed.  292,  295.    (D.  C— S.  D.  Ohio,  W.  D.  1913.) 

§  524.  Patent  does  not  Excuse  Conspiracy  to  Restrain  Trade. 
The  monopoly  of  one  patentee  cannot  be  extended  and 
made  more  of  a  monopolj^  by  that  of  another.  The  grant 
of  an  exclusive  right  to  make  and  vend  a  certain  machine 
does  not  include  a  license  to  combine  and  conspire  with 
another,  having  a  like  exclusive  right,  to  restrain  trade 
and  commerce  or  to  conspire  not  to  put  the  patented  ar- 
ticles on  the  market.  Bobbs-Merrill  Co.  v.  Straus,  139  Fed. 
155,  191.    (C.  C— S.  D.  New  York,  1905.) 

§  525.  Patentee  Cannot  Excuse  or  Cloak  Monopolies  Out- 
side of  Patent. 
"The  fact  that  one  patentee  may  possess  himself  of 
several  patents,  and  thus  increase  his  monopoly,  affords 
no  support  for  an  argument  in  favor  of  a  combination  by 


Patents,  Copyrights,  Trade-xMarks,  etc.      241 

several  distinct  owners  of  such  property  to  restrain  manu- 
facture, control  sales,  and  enhance  prices.  Such  combina- 
tions are  conspiracies  against  the  public  interests,  and 
abuses  of  patent  privileges.  The  object  of  these  privileges 
is  to  promote  the  public  benefit,  as  well  as  to  reward  in- 
ventors. The  suggestion  that  the  contract  is  justified  b}'^ 
the  situation  of  the  parties  .  .  .  their  exposure  to  litiga- 
tion ...  is  entitled  to  no  greater  weight.  Patentees  may 
compose  their  differences  as  the  owners  of  other  property 
may,  but  they  cannot  make  the  occasion  an  excuse  or 
cloak  for  the  creation  of  monopolies  to  the  public  disad- 
vantage." (Butler,  District  Judge.)  National  Harrow  Co. 
V.  Bench,  83  Fed.  36,  38.  (C.  C.  A.  Third  Circuit,  1897.) 
"The  monopoly  secured  to  the  patentee  by  the  issuance 
of  a  patent  cannot  be  designedly  used  to  form  a  combina- 
tion or  conspiracy  between  manufacturers  and  dealers  to 
accomplish  a  restraint  of  trade  such  as  the  Anti-Trust 
Act  prohibits."  (Hazel,  District  Judge.)  U.  S.  v.  New 
Departure  Mfg.  Co.,  204  Fed.  107,  113.  (D.  C— W.  D. 
New  York,  1913.) 

§  526.  Monopoly  Beyond  Patent  Term. 

The  exclusive  rights  granted  under  the  patent  laws  are 
no  justification  of  a  monopoly  relating  to  patented  articles 
carried  out  by  means  of  a  combination  of  manufacturers 
to  engross  the  market,  control  prices  and  prevent  competi- 
tion for  a  period  of  fifty  years  beyond  the  possible  lifetime 
of  any  of  the  patents.  Strout  v.  National  Harrow  Co.,  18 
N.  Y^  Supp.  224,  233-234.  (New  York  Supreme  Court, 
1892.) 

§  527.  Added  Element  of  Patent  Cannot  Excuse  Combina- 
tion Otherwise  Prohibited. 
Where  a  combination  of  manufacturers  and  jobbers  is 


242  Manual  of  the  Sherman  Law 

condemned  as  in  restraint  of  tratU^  under  the  Act,  the 
added  element  of  a  patent  cannot  confer  immunity  from  a 
like  condemnation.  "Rights  conferred  by  patents  are 
indeed  very  definite  and  extensive,  but  they  do  not  give 
any  more  than  other  rights  a  universal  license  against 
positive  prohibition."  {Mr.  Justice  McKenna.)  Stand- 
ard Sanitanj  Mfg.  Co.  v.  U.  S.,  226  U.  S.  20,  49  (1912). 

§  528.  Right  of  Contract  Under  Patents. 

The  individual  right  of  contract  is  not  affected  by  the 
grant  of  letters  patent,  whether  rights  arising  under  said 
letters  patent  are  involved  or  not,  the  said  right  of  con- 
tract being  a  matter  within  the  scope  of  the  general  law 
rather  than  technical  rules  of  patent  law.  Pope  Mfg.  Co. 
v.  Gormully,  144  U.  S.  224,  232  et  seq.  (1892);  State  v. 
Bell  Telephone  Co.,  23  Fed.  539,  540  (C.  C— E.  D.  Mis- 
souri, 1885);  State  v.  Delaware,  etc.,  Tel.  Co.,  47  Fed.  633, 
635  (C.  C.  Delaware,  1891);  Delaware,  etc.,  Tel.  Co.  v. 
Postal  Telegraph  Co.,  50  Fed.  677,  678  et  seq.  (C.  C.  A. 
Third  Circuit,  1892,  affirming  47  Fed.  633);  Heaton- 
Peninsular  Button-Fastener  Co.  v.  Eureka  Specialty  Co., 
77  Fed.  288,  292-293  (C.  C.  A.  Sixth  Circuit,  l^m)- Strait 
V.  National  Harrow  Co.,  18  N.  Y.  Supp.  224,  233-234. 
(New  York  Supreme  Court,  1892.)  Opinion  of  the  Justices, 
193  Mass.  605,  610-611.     (Mass.  Supreme  Court,  1907.) 

§  529.  Patentee's  Right  of  Contract  not  Peculiarly  Subject- 
Matter  for  Federal  Court. 
While  the  Federal  Courts  have  exclusive  jurisdiction 
of  all  cases  arising  under  the  patented  laws,  they  have  no 
jurisdiction  by  reason  of  subject-matter  of  cases  arising 
out  of  contracts  concerning  patents.  Thus,  the  Federal 
Courts  have  no  jurisdiction  of  an  action  for  specific  per- 
formance of  a  license  contract  as  to  matters  not  involving 


Patents,  Copykights,  Tuade-marks,  etc.      243 

infringement  of  the  patent.  Brown  v.  Shnnno7i,  20  How. 
55,  56  et  seq.  (1857);  Hartell  v.  Tilghnan,  99  U.  S.  547, 
548  et  seq.  (1878) ;  Goodyear  v.  Union  Rubber  Co.,  4  Blatchf. 
63,  70  (C.  C— S.  D.  New  York,  1857) ;  Burr  v.  Gregory, 
2  Paine,  426,  429.    (C.  C.) 

Or,  by  reason  of  the  subject-matter,  of  an  action  to  re- 
cover royalties  under  a  contract  involving  a  license  to 
make,  use  or  sell  under  letters  patent.  Albright  v.  Teas, 
106  U.  S.  613,  616  et  seq.  (1892);  Dale  Tile  Mfg.  Co.  v. 
Hyatt,  125  U.  S.  46,  52  (1887);  Blanchard  v.  Sprague,  1 
Cliff.  288,  298-299.    (C.  C.  Mass.  1859.) 

Or,  by  reason  of  subject-matter,  of  a  bill  in  equity  to  set 
aside  an  assignment  of,  or  a  license  contract  under,  let- 
ters patent.  Wilson  v.  Sandford,  10  How.  99,  101-102 
(1850);  Merserole  v.  Union  Paper  Collar  Co.,  6  Blatchf. 
356,  359.    (C.  C— S.  D.  New  York,  1869.) 

§  530.  Right  of  Purchaser  of  Patented  Article. 

"The  purchaser  of  an  article  made  under  a  patent  right 
may  not  duplicate  it,  but  he  may  use  the  article  pur- 
chased and  sell  the  same  as  his  own  in  any  way  or  for  any 
price  he  sees  fit."  (Ray,  District  Judge.)  Bobbs-Merrill 
Co.  V.  Straus,  139  Fed.  155,  188.  (C.  C— S.  D.  New  York, 
1905.) 

Where  a  patentee  makes  and  vends  an  article  incor- 
porating the  patented  invention,  "the  purchaser  can  use 
the  article  in  any  part  of  the  United  States,  and,  unless 
restrained  by  contract  with  the  patentee,  can  sell  or  dis- 
])Ose  of  the  same."  {Mr.  Justice  Shiras.)  Keeler  v. 
Standard  Folding  Bed  Co.,  157  U.  S.  659,  661  (1895). 

§  631.  Patentee  Cannot  Control  Future  Price  of  Subsequent 
Sales. 
There  is  not  included  within  the  exclusive  right  of  a 


244  Manual  of  the  Sherman  Law 

patentee  to  "vend"  his  patented  article,  the  right  by  no- 
tice, to  dictate  the  price  at  which  subsequent  sales  of  the 
article  may  be  made.  Having  once  parted  with  the  physi- 
cal embodiment  of  his  invention  by  passing  title  to  a  pur- 
chaser, the  patentee  has  placed  the  article  beyond  the 
limit  of  the  monopoly  secured  by  the  patent  grant.  Bauer 
V.  O'DonneU,  229  U.  S.  1,  16-17  (1913);  Adams  v.  Burke, 
17  Wall.  453,  455  (1873);  Kelloyy  Toasted  Corn  Flake  Co. 
v.  Buck,  208  Fed.  383,  384  (D.  C— S.  D.  California,  S.  D. 
1913);  Robert  H.  Ingersoll  &  Bro.  v.  McCoU,  204  Fed.  147, 
148  et  seq.    (D.  C.  Minnesota,  3rd  Div.  1913.) 

§  532.  Where  full  Consideration  has  not  been  Paid. 

Where  the  full  consideration,  however,  has  not  been  paid 
by  the  purchaser  of  a  patented  article,  and  the  purchaser 
has  only  obtained  a  qualified  title  to  such  article  by  ac- 
cepting the  same  with  notice  that  it  was  to  be  used  only 
Avith  certain  specified  supplies  therefor  obtained  from  the 
patentee,  the  article  is  still  within  the  limits  of  the  patent 
monopoly,  and  a  violation  of  said  restriction  by  said  pur- 
chaser or  by  a  subsequent  purchaser  with  notice  would 
amount  to  infringement  of  the  right  of  exclusive  use  con- 
ferred by  the  patent.  Henry  v.  Dick  Co.,  224  U.  S.  1,  26- 
27  (1911);  Bauer v.O'Donnell,  229  v.  ^.  1,  14  et  seq.  (1913). 

But  if  the  effect  of  such  restriction  is  to  substantially' 
lessen  competition  or  to  tcmd  to  create  a  monopoly  of  in- 
terstate commerce,  it  is  unlawful.  Act  of  October  15,  1914 
(Clayton  Act),  Sect.  3. 

§  533.  Reasonable  and  Legal  Conditions  not  Prohibited. 

Except  as  above  stated,  the  Act  clearly  "does  not  refer 
to  that  kind  of  restraint  of  interstate  commerce  which 
may  arise  from  reasonal)l<^  and  legal  conditions  imposed 
upon  the  assignee  or  hcensee  of  a  patent  by  the  owner 


Patents,  Copyrights,  Trade-marks,  etc.      245 

thereof,  restricting  the  terms  upon  which  the  article  may 
be  used  and  the  price  to  be  demanded  therefor."  {Mr. 
Justice  Peckham.)  Bement  v.  National  Harrow  Co.,  186 
U.  S.  70,  92  (1902);  Henry  v.  Dick  Co.,  224  U.  S.  1,  30 
(1911). 

§  534.  General  Rule. 

"The  rule  is,  with  few  exceptions,  that  any  conditions 
which  are  not  in  their  very  nature  illegal  with  regard  to 
this  kind  of  property  (patented  inventions),  imposed  by 
the  patentee  and  agreed  to  by  the  licensee  will  be  up- 
held by  the  courts.  The  fact  that  the  conditions  in  the 
contracts  uphold  the  patent  monopoly  or  fix  prices  does 
not  render  them  illegal."  (Mr.  Jws^ice Peckham.)  Bement 
V.  National  Harrow  Co.,  186  U.  S.  70,  91  (1902). 

This  general  rule,  however,  must  be  now  taken  in  con- 
nection with  the  third  section  of  the  Clayton  Act  providing : 
"That  it  shall  be  unlawful  for  any  person  engaged  in  com- 
merce, in  the  course  of  such  commerce,  to  lease  or  make  a 
sale  or  contract  for  sale  of  goods,  wares,  merchandise, 
machinery,  supplies,  or  other  commodities,  whether  pat- 
ented or  unpatented,  for  use,  consumption  or  resale  within 
the  United  States  or  any  Territory  thereof  or  the  District 
of  Columbia  or  any  insular  possession  or  other  place  under 
the  jurisdiction  of  the  United  States,  or  fix  a  price  charged 
therefor,  or  discount  from,  or  rebate  upon,  such  price,  on 
the  condition,  agreement  or  understanding  that  the  lessee 
or  purchaser  thereof  shall  not  use  or  deal  in  the  goods, 
wares,  merchandise,  machinery,  supplies  or  other  com- 
modities of  a  competitor  or  competitors  of  the  lessor  or 
seller,  where  the  effect  of  such  lease,  sale,  or  contract  for 
sale  or  such  condition,  agreement  or  understanding  may 
be  to  substantially  lessen  competition  or  tend  to  create  a 
monopoly  in  any  line  of  commerce." 


240  Manuat,  of  the  Sherman  Law 

§  535.  Contract  Coextensive  with  Patent  Monopoly. 

"It  seems  self-evident  that  a  contract  which  is  only  co- 
extensive with  the  monopoly  conferred  ])y  letters  patent, 
and  which  creates  no  additional  restraint  of  trade  or 
monopoly,  does  not  conflict  with  the  Sherman  Act." 
(Brown,  District  Judge.)  Blount  Mfg.  Co.  v.  Yale  & 
Towne  Mfg.  Co.,  1G6  Fed.  555,  557.    (C.  C.  Mass.  1909.) 

§  536.  Restriction  to  Enhance  Value  of  Patent. 

Where  as  an  incident  to  the  sale  of  a  patent,  and  for  the 
purpose  of  securing  the  largest  commercial  return,  the 
patentee  covenants  in  effect  not  to  engage  in  or  be  con- 
nected with  a  business  competing  therewith  during  the 
period  or  within  the  territory  covered  by  such  patent  ex- 
cept in  the  event  of  the  return  of  the  purchase  price,  such 
restriction  is  not  in  unlawful  restraint  of  trade  and  may  be 
enforced.  American  Brake  Beam  Co.  v.  Pungs,  141  Fed. 
923,  925-926.  (C.  C.  A.  Seventh  Circuit,  1905.)  In  this 
connection  see  also  Clayton  Act,  Sect.  3. 

§  537.  Selling  Price  Restrictions. 

"The  owner  of  a  patented  article  can,  of  course,  charge 
such  price  as  he  may  choose,  and  the  owner  of  a  patent  may 
assign  it  or  sell  tlie  right  to  manufacture  and  sell  the  article 
patented  upon  the  condition  that  the  assignee  shall  charge  a 
certain  amount  for  such  article."  (Mr.  Justice  Peckham.) 
Bement  v.  National  Harrow  Co.,  186  U.  S.  70,  93  (1902). 

Subject,  however,  to  the  provisions  of  Section  3  of  the 
Clayton  Act,  that  competition  is  not  to  be  substantially 
lessened  or  a  tendency  to  create  a  monopoly  of  inter- 
state trade  brought  about. 

§  538.  Reasonable  Restriction  in  License  Contracts.    Exclu- 
sive Use. 
"There  is  nothing  whicli  violates  the  Act  (Sherman  Anti- 


Patents,  Copyrights,  Trade-marks,  etc.      247 

Trust  Act)  in  the  agreement  that  plaintiff  would  not  license 
any  other  person  than  the  defendant  to  manufacture  or  sell 
any  harrow  of  the  peculiar  style  and  construction  then 
used  or  sold  by  the  defendant.  It  is  a  proper  provision 
for  the  protection  of  the  individual  who  is  the  licensee,  and 
is  nothing  more  in  effect  than  an  assignment  or  sale  of  the 
exclusive  right  to  manufacture  and  vend  the  article." 
{Mr.  Justice  Peckham.)  Bemerit  v.  National  Harrow  Co., 
18G  U.  S.  70,  94  (1902). 

§  539.  Maintenance  of  Prices  and  Restriction  of  Competition. 

"  The  right  of  the  owner  of  letters  patent  to  assign  rights 
to  manufacture,  use,  and  vend,  upon  condition  that  the 
assignee  shall  maintain  certain  prices,  and  to  agree  not  to 
compete  with  his  assignee  or  to  license  others  to  compete, 
is  recognized  "  by  the  courts.  (Brown,  District  Judge.) 
Blount  Mfg.  Co.  v.  Yale  &  Towns  Mfg.  Co.,  166  Fed.  555, 
557.    (C.  C.  Mass.  1909.) 

But  the  effect  of  such  condition  must  not  be  that  pro- 
hibited by  Section  3  of  the  Clayton  Act. 

§  540.  Restriction  must  not  Violate  some  Law  Outside  of 
Patent  Law. 

Whatever  the  terms  imposed  by  a  patentee  for  the  use 
of  his  invention  the  "courts  will  enforce  them  provided 
only  that  the  licensee  is  not  thereby  required  to  violate 
some  law  outside  of  the  patent  law."  (Baker,  Circuit 
Judge.)  Rubber  Tire  Wheel  Co.  v.  Milwaukee  R.  W.  Co., 
154  Fed.  358,  362.    (C.  C.  A.  Seventh  Circuit,  1907.) 

§  641.  Restraints  Cannot  Disable  Public  Service  Corpora- 
tion in  Performance  of  its  Duties. 
While  patentees  are  under  no  ol)ligatioii  to  license  the 
use  of  their  inventions  to  any  public  service  corporation, 


248  Manual  of  the  Sherman  Law 

yet  having  done  so  they  are  not  at  hborty  to  place  re- 
straints upon  sueli  a  public  corporation  which  would  dis- 
able it  to  discharge  all  the  duties  imposed  upon  companies 
engaged  in  the  discharge  of  duties  subject  to  regulation 
by  law.  Bement  v.  National  Harroic  Co.,  186  U.  S.  70,  91 
(1902),  and  cases  cited. 

§  642.  Restriction  to  Prevent  Infringement. 

A  restrictive  provision  in  a  license  contract  relating  to 
harrows  manufactured  and  sold  by  the  defendant  is  valid 
under  the  Act  where  the  plain  purpose  of  the  provision  was 
to  prevent  the  defendant  from  infringing  upon  the  rights 
of  others  under  their  patents,  and  it  had  no  purpose  to 
stifle  competition  in  the  harrow  business  more  than  the 
patent  recited  in  the  contract  provided  for,  or  to  prevent 
the  defendant  from  attempting  to  make  any  improvement 
in  harrows.  Bement  v.  National  Harrow  Co.,  186  U.  S.  70, 
94  (1902). 

§  543.  Settlement  of  Suits  for  Infringement. 

It  is  a  legitimate  and  desirable  result  in  and  of  itself  to 
settle  and  prevent  in  the  future  suits  for  infringement  and 
for  injunction  based  upon  letters  patent,  j)articularly 
where  there  has  been  a  large  amount  of  patent  litigation 
between  the  parties  and  the  likelihood  of  further  litigation 
in  the  future.  Bement  v.  National  Harrow  Co.,  186  U.  S. 
70,  93  (1902). 

§  544.  General  Rule  that  on  Suits  for  Infringement,  Sher- 
man Anti-Trust  Act  is  no  Defense. 
"Th(!  proposition  that  the  plaintiff,  while  infringing  the 
rights  vested  in  the  defendant  under  letters  patent  of  the 
United  States,  is  entitled  to  stop  the  defendant  from 
bringing  or  prosecuting  any  suit  therefor  because  the  de- 
fendant is  an  obnoxious  corporation,  and  is  seeking  to 


Patents,  Copyrights,  Trade-marks,  etc.      249 

perpetuate  the  monopoly  which  is  conferred  upon  it  by 
its  title  to  the  letters  patent,  is  a  novel  one,  and  entirely 
unwarranted."  (Mr.  Justice  Harlan.)  Connolly  v.  Union 
Sewer  Pipe  Co.,  184  U.  S.  540,  546  (1902). 

Where  in  defense  to  a  bill  for  infringement  of  patents,  it 
is  alleged  that  the  title  to  said  patents  is  clouded  because 
of  mesne  assignments  which  are  merely  in  furtherance 
of  an  illegal  combination,  such  defense  if  maintainable 
should  very  explicitly  and  exactly  show  how  the  com- 
plainant is  an  unlawful  association,  giving  all  the  necessary 
particulars,  in  order  that  the  complainant  can  know  pre- 
cisely what  it  is  to  meet,  and  so  that  the  court  can  deter- 
mine whether  all  the  rights  of  said  complainant  to  protect 
its  claim  to  said  patents  have  been  forfeited,  ipso  facto, 
by  entering  into  such  an  association.  Otis  Elevator  Co.  v. 
Geiger,  107  Fed.  131,  134.    (C.  C.  Kentucky,  1901.) 

A  corporation  is  not  denied  its  right  to  sue  for  infringe- 
ment upon  a  patent  owned  by  it,  because  it  has  violated 
an}^  of  the  provisions  of  the  Sherman  Anti-Trust  Act. 
The  grantee  of  a  patent  is  not  to  be  refused  the  protection 
of  the  patent  statutes  because  he  has  committed  an  of- 
fense under  some  other  branch  of  the  law.  General  Elec- 
inc  Co.  V.  Wise,  119  Fed.  922,  924.  (C.  C— N.  D.  New 
York,  1903.) 

"The  charge,  if  established,  that  the  complainant  is  it- 
self, or  is  a  member  of,  a  combination  in  violation  of  the 
federal  anti-trust  statute,  is  not  a  defense  available  in  an 
action  for  the  infringement  of  a  patent."  (Noyes,  Circuit 
Judge.)  Motion  Picture  Patents  Co.  v.  Laemmle,  178  Fed. 
104,  105  (C.  C— S.  D.  New  York,  1910);  Motion  Picture 
Patents  Co.  v.  Eclair  Film  Co.,  208  Fed.  416  (D.  C.  New 
Jersey,  1913);  National  Folding-Box  &  P.  Co.  v.  Robert- 
son, 99  Fed.  985,  987-989  (C.  C.  Connecticut,  1900),  re- 
viewing the  cases. 


250  Manual  of  the  Sherman  Law 

§  545,  Violation  of  Act  no  Defense  in  Infringement  of  Trade- 
Mark. 

"  The  Sherman  Act  has  its  ovm  penalties  for  violation  of 
its  provisions.  It  contains  nothing  that  sanctions  the 
argument  that  an  offender  against  it  shall  be  deprived  of 
redress  for  a  civil  injury  on  the  plea  that  he  has  been 
guilty  of  an  infraction  of  that  act."  Thus  on  a  suit  for 
infringement  of  a  trade-mark,  violations  of  the  act  have  no 
relevancy.  (Swan,  District  Judge.)  N.  W.  Consol.  Mill. 
Co.  V.  Callam  &  Son,  111  Fed.  786,  788  (C.  C— E.  D. 
Michigan,  N.  D.  1910);  Coco-Cola  Co.  v.  Deacon  Brown 
Bottling  Co.,  200  Fed.  105,  106.  (D.  C— N.  D.  Alabama, 
S.  D.  1912.) 

§  546.  Doctrine  that  Defense  may  be  Raised  Where  Illegal 
Agreement  is  Necessarily  Involved. 

Where  it  appears  in  a  suit  in  equity  brought  for  infringe- 
ment of  patents  that  a  court  cannot  sustain  the  bill  without 
giving  aid  to  the  unlawful  combination  represented  by  the 
complainant,  it  has  l)een  decided  in  a  proper  case  that  af- 
firmative relief  should  be  denietl  and  the  bill  dismissed. 
(See  Opinion  of  Coxe,  District  Judge.)  National  Harrow 
Co.  V.  Hench,  84  Fed.  226,  227,  228  (C.  C— N.  D.  New 
York,  1898) ;  National  Harrow  Co.  v.  Quick,  67  Fed.  130, 
132.    (C.  C.  Indiana,  1895.) 

•  While  the  broad  doctrine  of  these  cases,  however,  would 
seem  to  be  sound,  its  api)lication  to  the  general  situation 
therein  disclosed  has  not  l)een  generally  followed,  chiefly  on 
the  ground  that  merely  because  a  complainant  is  an  ob- 
noxious corporation  does  not  deprive  it  of  tlu^  right  to  sue 
upon  letters  patent  to  which  it  has  the  legal  title  no  mat- 
ter how  acquired,  and  that  seeking  to  perpetuate  the 
monopoly  granted  by  letters  patent  carmot  logically  be 
said  to  be  giving  aid  to  an  unlawful  combination.    National 


Patents,  Copyrights,  Trade-marks,  etc.      251 

Folding-Box  d-  P.  Co.  v.  Robertson,  99  Fed.  985,  987-989 
(C.  C.  Connecticut,  1900),  and  cases  cited. 

But  it  would  nevertheless  appear,  where  the  infringe- 
ment complained  of  was  of  a  contributing  character  and 
consisted  in  the  violation  of  restrictions  or  conditions 
contained  in  one  of  a  number  of  license  contracts  which 
were  in  furtherance  of  the  purposes  of  any  illegal  combina- 
tion forbidden  by  the  law,  that  the  bill  for  such  infringe- 
ment should  properly  he  dismissed,  for  otherwise  a  decree 
for  the  complainant  would  necessarily  involve  the  aid  of 
the  court  in  enforcing  an  illegal  contract.  For  a  case  where 
license  contracts  under  a  patent  were  held  to  be  illegal 
because  within  the  prohibitions  of  the  Act,  see  Standard 
Sanitary  Mfg.  Co.  v.  U.  S.,  226  U.  S.  20  (1912). 

§  547.  Enjoining  of  Bringing  of  Infringement  Suits. 

"The  proposition  that  the  plaintiffs,  while  infringing  the 
rights  vested  in  the  defendant  under  letters  patent  of  the 
United  States,  is  entitled  to  stop  the  defendant  from  bring- 
ing or  prosecuting  any  suit  therefor  because  the  defendant 
is  an  obnoxious  corporation,  and  is  seeking  to  perpetuate 
the  monopoly  which  is  conferred  upon  it  by  its  title  to  the 
letters  patent,  is  a  novel  one,  and  entirely  unwarranted. 
The  party  having  such  a  patent  has  a  right  to  bring  suit 
on  it,  not  only  against  a  manufacturer  who  infringes,  but 
against  dealers  and  users  of,  the  patented  article,  if  he 
believes  the  patent  is  being  infringed;  and  the  motive 
which  prompts  him  to  sue  is  not  open  to  judicial  inquiry, 
because,  having  a  legal  right  to  sue,  it  is  immaterial 
whether  his  motives  are  good  or  bad,  and  he  is  not  required 
to  give  his  reasons  for  the  attempt  to  assert  his  legal 
rights."  (Wallace,  Circuit  Judge.)  Strait  v.  National 
Harrow  Co.,  51  Fed.  819,  820.  (C.  C— N.  D.  New  York, 
1892.) 


'2!')2  Manual  of  the  Sherman  Law 

§  548.  Simultaneous  Infringement  Suits  by  Competitors. 

In  the  absence  of  proof  of  co-operation  of  two  concerns, 
each  manufacturing  and  selling  patented  articles,  to  in- 
jure the  business  or  property  of  a  competitor,  the  simul- 
taneous bringing  of  separate  suits  for  infringement  by  said 
concerns  upon  their  respective  patents  against  said  com- 
petitor has  no  sinister  significance  and  does  not  necessarily 
establish  concerted  action.  Virtue  v.  Creamery  Package 
Co.,  Til  U.  S.  8,  31  et  seq.  (1912). 

§  549.  Copyright  Act  does  not  Confer  Right  to  Control  Fu- 
ture Sales. 
The  copyright  act  in  conferring  the  exclusive  right  to 
vend  upon  the  proprietor  of  the  copyright  did  not  therel)y 
confer  upon  said  proprietor  any  further  right  to  control 
the  future  sales  of  the  copyrighted  article  after  he  had 
(exercised  the  right  to  vend  secured  him  by  said  Act. 
Straus  V.  Am.  Publishers'  Assn.,  231  U.  S.  222,  234  (1913); 
Bohhs-Merrill  Co.  v.  Straus,  210  U.  S.  339,  351  (1908). 

§  550.  Where  Purchaser  is  Absolute  Owner. 

''The  purchaser  of  a  copyrighted  book  may  not  publish 
or  make  or  print  a  copy,  as  this  would  be  an  infringement 
of  the  copyright;  but  this  restriction  in  no  way  interferes 
with  the  absolute  ownership  of  the  particular  copy  of  the 
book."  (Ray,  District  Judge.)  Bohhs-MerriR  Co.  v. 
Straus,  139  Fed.  155,  188  (C.  C— S.  D.  New  York,  1905) ; 
Bohhs-Merrill  Co.  v.  Straus,  210  U.  S.  339,  350  (1908). 

§  551.  Proprietor  of  Copyright  After  Absolute  Sale  Cannot 
Restrict  Alienation. 
"  Under  the  law  of  copyright,  when  the  owner  of  a  copy- 
right and  of  a  particular  copy  of  a  book  to  which  it  per- 
tains has  parted  witii  all  his  title  to  the  book,  and  has  con- 


Patent.s,  Copyrights,  Trade-marks,  etc.      253 

forrccl  an  absolute  title  to  it  upon  a  purchaser,  he  cannot 
restrict  the  right  of  alienation,  which  is  one  of  the  incidents 
of  ownership  in  private  property."  (Knowlton,  J.) 
Garst  V.  Hall  &  Lyon  Co.,  179  Mass.  588,  591;  Bohhs- 
Mernll  Co.  v.  Straus,  139  Fed.  155,  185  (C.  C— vS.  D.  New 
York,  1905) ;  Bobbs-Merrill  Co.  v.  Straus,  210  U.  S.  339, 
349-350  (1908). 

§  552.  No  Infringement  of  Copyright  to  Violate  Price  Re- 
striction. 
It  is  not  an  infringement  of  a  copyright  of  a  book  for  the 
owner  of  copies  of  the  book  to  sell  such  copies  at  a  price 
which  violates  a  valid  contract  between  the  publisher  of 
the  book  and  the  dealer,  and  which  was  made  at  the  time 
such  dealer  became  the  owner.  Bobbs-Merrill  Co.  v. 
Straus,  139  Fed.  155,  182.    (C.  C— S.  D.  New  York,  1905.) 

§  553.  Single  Owner. 

"A  corporation,  on  becoming  the  owner  of  several 
patents  or  of  several  copyrights,  may  do  all  acts  under 
each  that  the  person  to  whom  such  rights  were  originally 
granted  might  have  done.  Having  become  the  o^vner,  it 
is  entitled  to  the  benefit  and  privileges  of  the  monopolies 
granted."  (Ray,  District  Judge.)  Bobbs-Merrill  Co.  v. 
Straus,  139  Fed.  155, 191.    (C.  C— S.  D.  New  York,  1905.) 

§  554.  Purpose  of  Acquisition  Immaterial. 

"A  person  or  a  corporation  may  lawfully  become  the 
owner  of  any  number  of  copyrights  or  of  all  the  copyrights 
of  books  issued  by  the  United  States,  and  it  is  immaterial 
that  the  purpose  is  to  monopolize  the  whole  business  of 
publishing  and  selling  copyrighted  books."  (Ray,  Dis- 
trict Judge.)  Bobbs-Merrill  Co.  v.  Straus,  139  Fed.  155, 
190.    (C.  C— S.  D.  New  York,  1905.) 


254  Manual  of  the  Sherman  Law 

§  555.  Acquisition  by  Single  Owner  must  not  be  mere  Cover 
for  Combination. 
"  One  man  cannot  combine  or  conspire.  It  takes  two  or 
more  to  make  a  combination  or  conspiracy.  So  an  agree- 
ment by  all  owners  of  copyrights  to  assign  the  same  to  one 
person  or  corporation  is  but  a  sale  of  their  own.  If  the 
agreement  be  a  mere  pretense,  however,  a  mere  cover  for 
a  combination  to  violate  some  statute,  then  such  agree- 
ments to  sell  would  be  void  and  the  whole  combination 
illegal  and  void."  (Ray,  District  Judge.)  Bohbs-Merrill 
Co.  V.  Straus,  139  Fed.  155,  191.  (C.  C— S.  D.  New 
York,  1905.) 

§  556.  Copyright  Statute  Cannot  Authorize  Agreements  or 
Combinations  in  Restraint  of  Trade. 

"  No  more  than  the  patent  statute  was  the  copyright  act 
intended  to  authorize  agreements  in  unlawful  restraint 
of  trade  and  tending  to  monopoly  in  violation  of  the 
specific  terms  of  the  Sherman  Law."  (Mr.  Justice  Day.) 
Straus  V.  Am.  Publishers'  Assn.,  231  U.  S.  222,  234  (1913). 

When  all  the  publishers  of  copyrighted  books  and 
dealers  therein  combine  to  exact  a  fixed,  arbitrary  price, 
the  readers  of  such  books  become  powerless  to  escape  from 
such  exaction  because  of  the  new  monopoly  created  by 
such  combination  in  addition  to  the  copyright  monopoly, 
and  the  combination  comes  within  the  prohibitions  of  the 
Sherman  Anti-Trust  Act.  Bobbs-Merrill  Co.  v.  Straus, 
139  Fed.  155,  192.    (C.  C— S.  D.  New  York,  1905.) 

Where  by  resolution,  agreements,  and  other  methods 
to  the  end  that  copyrighted  books  are  sold  to  book-sellers 
who  maintain  the  retail  price  thereof,  and  not  to  book- 
sellers who  cut  such  prices,  an  association  has  prevented 
competition  in  the  sale  of  such  books  throughout  the 
several  states,  such  restraint  is  within  the  flenunciation  of 


Patents,  Copyrights,  Trade-marks,  etc.      255 

the  Sherman  Act,  and  the  copyright  act  cannot  be  invoked 
in  justification  thereof.  Straus  v.  Am.  Publishers'  Assn., 
231  U.  S.  222,  229  et  seq.  (1913). 

§  557.  Contracts  Relating  to  Secret  Formulas. 

There  is  a  distinction  between  the  statutory  monopoly 
accorded  to  articles  protected  by  a  patent  or  a  copyright 
and  articles  made  under  trade  secrets  or  private  medical 
formulas.  Contracts  regarding  such  articles  are  neither 
outside  the  prohibition  of  the  Sherman  Law  or  common 
law,  or  within  the  statutory  protection  accorded  patents 
or  copyrights.  Dr.  Miles  Medical  Co.  v.  J.  D.  Park  &  Sons 
Co.,  164  Fed.  803,  805-806  (C.  C.  A.  Sixth  Circuit,  1908); 
Dr.  Miles  Medical  Co.  v.  J.  D.  Park  &  Sons  Co.,  220  U.  S. 
373,401-404  (1911). 

§  658.  Covenant  of  Vendor  not  to  Use  Secret  Process. 

"Upon  the  sale  of  a  secret  process,  a  covenant,  express 
or  implied,  that  the  seller  will  not  use  the  process  himself 
or  communicate  it  to  any  other  person,  is  lawful,  because 
the  process  must  be  kept  secret  in  order  to  be  of  any  value 
and  the  public  has  no  interest  in  the  question  by  whom  it 
is  used."  {Mr.  Justice  Gray.)  Central  Trans.  Co.  v. 
Pullman  Palace  Car  Co.,  139  U.  S.  24,  53  (1890). 

§  659.  Articles  made  Under  Secret  Formulas  not  Exempt 
from  Law. 
A  free  right  of  alienation  is  an  incident  to  the  general 
right  of  property  in  articles  which  pass  from  hand  to  hand 
in  the  commerce  of  the  world.  There  is  no  economic  or 
legal  reason  to  exempt  articles  made  under  a  private  for- 
mula from  the  rules  against  unlawful  restraints  of  trade. 
Dr.  Miles  Medical  Co.  v.  J.  D.  Park  &  Sons  Co.,  164  Fed. 
803,  806-7  (C.  C.  A.  Sixth  Circuit,  1908) ;  Dr.  Miles  Medi- 
cal Co.  V.  J.  D.  Park  &  Sons  Co.,  220  U.  S.  373,  404  (1911). 


CHAPTER  XVIII 

WITNESSES :  SUBPCENA  DUCES  TECUM,  IMMUNITY,  CONTEMPT 

§  560.  Subpoenas  in  General. 

Ill  any  suit,  action,  or  proceeding  brought  by  or  on  be- 
half of  the  United  States,  subpoenas  for  witnesses  who 
are  required  to  attend  a  court  of  the  United  States  in  any 
judicial  district  in  any  case,  civil  or  criminal,  arising  under 
the  anti-trust  laws  may  run  into  any  other  district:  Pro- 
vided, That  in  civil  cases  no  writ  of  subpoena  shall  issue 
for  witnesses  living  out  of  the  district  in  which  the  court 
is  held  at  a  greater  distance  than  one  hundred  miles  from 
the  place  of  holding  the  same  without  the  permission  of 
the  trial  court  being  first  had  upon  proper  application  and 
cause  shown.  Clayton  Act  (Act  of  October  15,  1914), 
Sect.  13. 

§  561.  Necessity  of  Application  for  Subpoena  Duces  Tecum. 

Notwithstanding  the  contra  practice  in  some  of  the 
state  courts,  a  subpoena  duces  tecum  will  only  issue  out  of 
a  federal  court  in  a  civil  cause  upon  proper  application 
being  made  therefor  and  after  order  of  the  court  thereon 
directing  the  clerk  to  issue  the  subpoena.  Dancel  v.  Good- 
year Shoe  Mack.  Co.,  128  Fed.  753,  75G,  761-762  (C.  C. 
Mass.  1904);  U.  S.  v.  Terminal  R.  Assn.,  154  Fed.  268, 
270-271.     (C.  C— E.  D.  Missouri,  E.  D.  1907.) 

§  562.  Definiteness  required. 
The  description  must  be  sptn'ific  enough  to  apprise  the 

25G 


Witnesses  257 

witness  of  the  particular  documents  and  books  called  for, 
and  not  so  general  as  to  warrant  the  supposition  that  they 
are  wanted  merely  for  a  "fishing  expedition."  U.  S.  v. 
Terminal  R.  Assn.,  154  Fed.  268-269.  (C.  C— E.  D. 
Missouri,  E.  D.  1907.) 

§  663.  Persons  Subject  Thereto. 

Such  subpoena  may  be  directed  to  a  corporation,  a  party 
litigant,  or  other  person.  If  the  service  of  the  subpoena 
fails  or  is  likely  to  fail  to  obtain  material  evidence  known 
to  be  in  the  possession  of  one  of  the  parties  to  the  suit, 
then  a  motion  or  petition  to  produce  may  be  resorted  to 
under  Revised  Statutes,  Sect.  724.  Merchants  Natl  Bank 
V.  State  Nan  Bank,  3  Cliff.  201,  202  et  seq.  (C.  C.  Mass. 
1868.)  That  a  corporation  may  be  subpoenaed  duces 
teum,  see  In  re  Am.  Sugar  Refining  Co.,  178  Fed.  109,  111. 
(C.  C— S.  D.  New  York,  1910.) 

§  564.  Reasonable  Ground  of  Relevancy. 

It  does  not  devolve  upon  the  applicant  for  a  subpoena 
duces  tecum  to  satisfy  the  court  beyond  any  reasonable 
doubt  that  the  books  and  papers  called  for  therein  are 
relevant  and  material.  All  that  is  required  is  that  there 
should  be  shown  to  be  a  reasonable  ground  to  believe  that 
they  may  be  relevant  and  material  at  the  trial  of  the 
cause.  U.  S.  v.  Terminal  R.  Assn.  of  St.  Louis,  148  Fed. 
486,  489.    (C.  C— E.  D.  Missouri,  E.  D.  1906.) 

§  566.  Mere  Statement  that  Documents  are  Material. 

On  an  application  for  a  subpcena  duces  tecum,  it  is  in- 
sufficient for  the  mover  to  allege  merely  "that  the  docu- 
ments desired  are  material  and  relevant  to  the  issue  in 
that  cause  " ;  the  facts  should  be  set  out  with  sufficient  full- 
ness in  order  to  enable  the  court  to  determine  whether  the 
documents  to  be  produced  are  in  fact  at  least  prima  facie 


258  Manual  of  the  Sherman  Law 

material  and  relevant  to  the  issues  of  the  cause.  U.  S.  v. 
Terminal  R.  Asm.  et  al,  154  Fed.  268,  269.  (C.  C— E.  D. 
Missouri,  E.  D.  1907.) 

§  566.  Unreasonable  Searches  and  Seizures. 

It  is  '"quite  clear  that  the  search  and  seizure  clause  of 
the  Fourth  Amendment  was  not  intended  to  interfere  with 
the  power  of  the  courts  to  compel,  through  a  suhpcena 
duces  tecum,  the  production,  upon  a  trial  in  court  of  docu- 
mentary evidence."  (Mr.  Justice  Brown.)  Hale  v. 
Henkel,  201  U.  S.  43,  73  (1906). 

Where  a  witness  is  ordered  to  produce  a  single  document 
or  numerous  documents  in  his  possession,  which  were  so 
adequately  and  particularly  described  as  to  enable  him  to 
find  them  for  use  in  a  pending  action,  civil  or  criminal,  the 
subpoena  duces  tecum,  making  such  order  is  unobjection- 
able and  is  not  an  unreasonable  search  and  seizure,  hi  re 
Hale,  139  Fed.  496,  503.    (C.  C— S.  D.  New  York,  1905.) 

But  a  subpoena  duces  tecum  may  be  so  broad  and  gen- 
eral in  character  as  to  be  the  equivalent  of  an  unreasonable 
search  and  seizure  within  the  constitutional  provision. 
In  re  Hale,  139  Fed.  496,  503.  (C.  C— S.  D.  New  York, 
1905.) 

"The  right  of  the  people  to  be  secure  in  their  persons, 
houses,  papers  and  effects,  against  unreasonable  searches 
and  seizures,  shall  not  be  violated,  and  no  warrants  shall 
issue  except  upon  probable  cause,  supported  by  oath  or 
affirmation,  and  particularly  describing  the  place  to  be 
searched,  and  the  persons  or  things  to  be  seized."  (Mr. 
Justice  Brown.)    Hale  v.  Henkel,  201  U.  S.  43,  71  (1906). 

An  order  for  the  production  of  books  and  papers  may 
constitute  an  unreasonable  search  under  the  Fourth 
Amendment,  where  too  sw(>(>ping  in  its  terms.  So  a  sub- 
poena duces  tecum  not  requiring  the  production  of  a  single 


Witnesses  259 

contract,  or  of  contracts  with  a  particular  corporation,  or 
a  limited  number  of  documents,  but  all  understandings, 
contracts,  correspondence  or  reports  between  one  com- 
pany and  several  other  companies  is  too  broad,  and  "a 
general  subpoena  of  this  description  is  equally  indefensible 
as  a  search  warrant  would  be,  couched  in  similar  terms." 
(Mr.  Justice  Brown.)  Hale  v.  Henkel,  201  U.  S.  43,  76- 
77  (1906). 

§  567.  Claim  of  Immateriality  by  Witness. 

"The  claim  of  immateriality  of  the  testimony  cannot 
avail  a  witness  against  the  orders  of  the  court."  (Mr. 
Justice  McKenna.)  Nelson  v.  U.  S.,  201  U.  S.  92,  114 
(1906). 

"It  is  not  for  the  witness  to  say  'I  will  not  produce 
these  records  and  papers  because  I  believe,  or  I  am  ad- 
vised, that  they  would  not  be  material  if  I  produced  them.' 
That  would  leave  the  determination  of  the  whole  matter 
with  the  witness  himself  and  the  court  would  be  power- 
less." (FiNKELNBURG,  DistHct  Judge.)  U.  S.  v.  Terminal 
R.  Assn.  of  St.  Louis,  148  Fed.  486,  488.  (C.  C— E.  D. 
Missouri,  E.  D.  1907.) 

§  568.  Books  and  Papers  of  a  Private  Nature. 

That  the  papers  and  books  called  for  are  of  a  private  or 
confidential  nature  is  no  excuse  for  their  non-production. 
Requiring  such  matters  to  be  brought  into  court  in 
obedience  to  a  subpoena  duces  tecum  properly  issued  is 
not  an  unreasonable  search  and  seizure  in  violation  of  the 
fourth  amendment  to  the  constitution  of  the  United  States. 
Private  interest  and  convenience  must  yield  to  the  exi- 
gencies of  the  case.  U.  S.  v.  Terminal  R.  Assn.  of  St. 
Louis,  148  Fed.  486,  489-490.  (C.  C— E.  D.  Missouri, 
E.  D.  1906.) 


260  Manual  of  the  Sherman  Law 

§  569.  Officers  of  a  Corporation. 

An  officer  of  a  defendant  corporation,  whose  duty  it  is 
to  have  the  physical  custody  and  control  of  its  documents, 
(cannot  excuse  his  disobedience  of  a  subpccna  duces  tecum 
on  the  ground  that  the  documents  called  for  were  in  the 
possession  and  control  of  the  corporation,  and,  therefore, 
were  not  shown  to  be  in  the  possession  or  under  the  con- 
trol of  the  witness.  "A  corporation  can  have  possession 
of  nothing  except  by  the  human  beings  who  are  its  officers, 
and  it  is  to  them,  not  the  intangible  being  they  represent 
and  act  for,  that  the  law  directs  its  process  of  subpoena 
and  must  procure  its  evidence."  (Mr.  Justice  McKenna.) 
Nelso7i  v.  U.  S.,  201  U.  S.  92,  115-116  (1906). 

§  670.  Presence  in  Court  of  Witness  or  Documents. 

A  subpoena  is  not  necessary  where  a  witness  is  present 
in  court  or  within  the  verge  of  the  court.  The  only  object 
of  a  subpoena  is  to  secure  his  attendance.  It  is  superfluous 
when  he  is  present  without  having  been  subpoenaed.  So 
the  rule  is  the  same  as  to  the  production  of  documents. 
U.  S.  v.  Armour  &  Co.,  142  Fed.  808,  824  (D.  C— N.  D. 
Illinois,  1906),  and  cases  cited. 

§  571.  Effect  of  Production  of  Books  and  Papers. 

Books  and  documents  prove  themselves  when  produced 
for  the  purpose  of  showing  admission  against  interest. 
They  are  receival^le  as  evidence  against  the  j^arty  pro- 
ducing them.  No  oath  is  essential  to  the  compulsion  to 
produce  the  documents  in  a  witness'  jwssession .  Accord- 
ingly, books  and  papers  produced  l)y  parties  tlefendant  as 
the  books  and  records  of  their  business,  and  called  for  as 
such,  are  evidence  against  them  without  any  oath.  U.  S. 
V.  Armour  &  Co.,  142  Fed.  808,  825  (D.  C— N.  D. 
Illinois,  1906),  and  cases  cited. 


Witnesses  261 

§  572.  Motion  to  Quash. 

The  sufficiency  of  a  .subpcpnd  duces  tecivm  after  issuance 
may  be  raised  on  a  motion  to  quash.  U.  S.  v.  Terminal  R. 
Assn.,  154  Fed.  268.    (C.  C— E.  D.  Missouri,  E.  D.  1907.) 

§  573.  General  Power  of  Equity  Court. 

"It  is  well  settled  that  a  court  of  equity  has  power  to 
compel  the  production  of  books  and  papers  in  virtue  of 
its  inherent  and  general  jurisdiction,  and  this  power  is 
not  confined  to  the  parties  in  the  suit,  but  extends  to  third 
persons."  (Finkelnburg,  District  Judge.)  U.  S.  v. 
Terminal  R.  Assn.  of  St.  Louis,  148  Fed.  486,  488.  (C.  C— 
E.  D.  Missouri,  E.  D.  1906.) 

§  574.  Incrimination  of  Witness. 

"It  is  a  rule  of  the  common  law  that  a  witness  will  not 
be  compelled  to  answer  any  question,  the  reply  to  which 
would  supply  evidence  by  which  he  could  be  convicted  of 
a  criminal  offense.  This  doctrine  was  firmly  implanted 
in  the  common  law  of  Great  Britain  and  of  the  colonies 
long  before  the  adoption  of  the  constitution  of  the  United 
States.  The  principle  is  held  so  sacred  in  this  country  that 
it  is  embodied  in  the  respective  constitutions  of  all  the 
states,  as  well  as  in  the  federal  constitution.  The  prin- 
ciple, as  apphed  to  this  case,  is  found  in  the  fifth  amend- 
ment to  the  constitution:  'No  person  shall  be  compelled 
in  any  criminal  case  to  be  a  witness  against  himself.'" 
(Shelby,  Circuit  Judge.)  Foot  v.  Buchanan,  113  Fed.  156, 
158.    (C.  C— N.  D.  Mississippi,  W.  D.  1902.) 

"It  is  true  that  the  witness  cannot  avoid  answering 
questions  upon  his  mere  statement  that  his  answers  to 
them  will  tend  to  criminate  him.  It  is  for  the  judge  to 
decide  whether  his  answer  will  reasonably  have  such  ten- 
dency, or  whether  it  will  furnish  an  element  or  link  in  the 


262  Manual  of  the  Sherman  Law 

chain  of  evidence  necessary  to  convict  him."  (Shelby, 
Circuit  Judge.)  Foot  v.  Buchanan,  113  Fed.  156,  160. 
(C.  C— N.  D.  Mississippi,  W.  D.  1902.) 

§  575.  Immunity  Statute. 

Except  for  perjury,  no  person  shall  be  prosecuted  or  be 
subjected  to  any  penalty  or  forfeiture  for  or  on  account  of 
any  transaction,  matter  or  thing  concerning  which  he  may 
testify  or  produce  evidence,  documentary  or  otherwise, 
in  any  proceeding,  suit,  or  prosecution  brought  by  the 
government  under  the  Sherman  Law  or  Interstate  Com- 
merce Act.     Act  of  February  25,  1903  (32  Stat.  854,  903.) 

This  immunity  shall  extend  only  to  a  natural  person 
who,  in  obedience  to  a  subpoena,  gives  testimony  under 
oath  or  produces  evidence,  documentary  or  otherwise, 
under  oath.    Act  of  June  30,  1906.    (43  Stat.  798.) 

§  576.  Status  of  Immunity  Law  Prior  to  June  30,  1906. 

It  seems  that  prior  to  June  30,  1906,  in  order  to  claim 
immunity  the  witness  need  not  be  compelled  by  subpoena 
to  testify;  since  in  theory  of  the  law  when  an  officer  who 
has  a  legal  right  to  make  a  demand,  makes  such  demand 
upon  a  citizen,  who  has  no  legal  right  to  refuse,  and  that 
citizen  answers  under  such  conditions,  he  answers  under 
compulsion  of  the  law.  U.  S.  v.  Armour  &  Co.,  142  Fed. 
808,  822-823.    (D.  C— N.  D.  Illinois,  1906.) 

§  577.  Purpose  of  Immunity  Acts. 

The  immunity  acts  are  intended  as  a  substitute  for  the 
privilege  contained  in  the  fifth  constitutional  amendment, 
reading:  "Nor  shall  any  person  be  compelled  in  any  crim- 
inal case  to  be  a  witness  against  himself."  This  has  been 
construed  by  the  courts  to  mean  that  the  witness  shall 
liave  the  right  to  rc^main  silent  when  questioned  upon  any 


Witnesses  263 

subject  where  the  answers  would  tend  to  incriminate  him. 
The  privilege  cannot  be  taken  away  without  giving  an 
immunity  at  least  as  broad  and  extensive.  U.  S.  v.  Ar- 
mour  &  Co.,  142  Fed.  808,  821,  822.  (D.  C— N.  D. 
Illinois,  1906.) 

§  578.  Absolute  Immunity  must  be  Given. 

A  statutory  enactment  to  remove  the  criminality  of  an 
offense  so  as  to  immunize  a  witness  must  afford  absolute 
immunity  to  such  witness  against  future  prosecution  for 
the  offense  to  which  the  question  relates.  Hale  v.  Henkel, 
201  U.  S.  43,  67  (1906);  Counselman  v.  Hitchcock,  142 
U.  S.  547,  586  (1892). 

§  679.  Scope  of  Section  860  of  the  Revised  Statutes. 

"Since  the  statute  of  February  11,  1893  (27  Stat.  443), 
parties  or  witnesses  in  cases  or  proceedings  under  the  act 
of  February  4,  1887  (24  Stat.  379) ,  to  regulate  commerce, 
and  amendments  thereto,  may  be  required  to  answer 
questions  that  tend  to  criminate  the  witness  or  party; 
but  witnesses  or  parties  in  other  cases  may  not  be  required 
to  answer  criminating  questions,  because  section  860  of 
the  Revised  Statutes  does  not  afford  complete  indemnity  to 
the  witness  or  party."  (Shelby,  District  Judge.)  Foot  v. 
Buchanan,  113  Fed.  156,  160.  (C.  C— N.  D.  Mississippi, 
W.  D.  1902.) 

"We  are  clearly  of  opinion  that  no  statute  which  leaves 
the  party  or  witness  subject  to  prosecution  after  he  answers 
the  criminating  question  put  to  him,  can  have  the  effect  of 
supplanting  the  privilege  conferred  by  the  constitution  of 
the  United  States.  Section  860  of  the  Revised  Statutes 
does  not  supply  a  complete  protection  from  all  the  perils 
against  which  the  constitutional  prohibition  was  designed 
to  guard,  and  is  not  a  full  substitute  for  that  prohibition. 


264  Manual  of  the  Sherman  Law 

In  view  of  the  constitutional  provision,  a  statutory  enact- 
ment to  be  valid,  must  afford  absolute  immunity  against 
future  prosecution  for  the  offense  to  which  the  question 
relates."  (Mr.  Justice  Blatchford.)  Counselman  v. 
Hitchcock,  142  U.  S.  547,  585-580  (1892) ;  Foot  v.  Buchanan, 
1 13  Fed.  156,  159.    (C.  C— N.  D.  Mississippi,  W.  D.  1902.) 

§  580.  Meaning  of  "  Proceeding." 

As  used  in  the  immunity  statute  the  word  "proceeding" 
is  a  broad  term  and  includes  any  step  preliminary  or  other- 
wise which  is  incident  to  the  institution  of  a  civil  suit  or 
a  criminal  prosecution.  Accordingly  an  investigation  by 
a  grand  jury  in  the  exercise  of  its  inquisitorial  power  is 
embraced  by  this  statute.  In  re  Hale,  139  Fed.  496,  501- 
502.     (C.  C— S.  D.  New  York,  1905.) 

§  581.  Operation  of  Fifth  Amendment. 

"The  interdiction  of  the  Fifth  Amendment  operates 
only  where  a  witness  is  asked  to  incriminate  himself — in 
other  words,  to  give  testimony  which  may  i)ossi])ly  expose 
him  to  a  criminal  charge.  But  if  the  criminality  has  al- 
ready been  taken  away,  the  Amenchnent  ceases  to  apply." 
That  is  "if  the  offense  be  outlawed  or  pardoned,  or  its 
criminality  removed  l)y  statute,  the  Amendment  ceases  to 
apply."  (Mr.  Justice  Brown.)  Hale  v.  Henkel,  201  U.  S. 
43,  67  (1906). 

§  582.  When  Fifth  Amendment  does  not  Apply. 

"  If  the  testimony  relates  to  criminal  acts  long  since 
past,  and  against  the  prosecution  of  which  the  statute 
of  limitations  has  run,  or  for  which  he  has  already  received 
a  pardon  or  is  guaranteed  an  immunity,  the  (fifth) 
amendment  does  not  apply."  (Mr.  Justice  Brown.) 
Hale  v.  Henkel,  201  U.  S.  43,  67  (1906). 


Witnesses  265 

§  583.  Immunity  is  Personal.    Third  Persons  not  Protected. 

"The  right  of  a  person  under  the  Fifth  Amendment  to 
refuse  to  incriminate  himself  is  purely  a  personal  privi- 
lege. It  was  never  intended  to  permit  him  to  plead  the 
fact  that  some  third  person  might  be  incriminated  by  his 
testimony,  even  though  he  were  the  agent  of  such  per- 
son. .  .  .  The  amendment  is  limited  to  a  person  who 
shall  be  compelled  in  any  criminal  case  to  be  a  witness 
against  himself,  and  if  he  cannot  set  up  the  privilege  of  a 
third  person,  he  certainly  cannot  set  up  the  privilege  of 
a  corporation."  {Mj\  Justice  Brown.)  Hale  v.  Henkel, 
201  U.  S.  43,  69-70  (1906). 

"The  immunity  provided  b}''  the  Fifth  Amendment 
against  self-incrimination  is  personal  to  the  witness  him- 
self, and  he  cannot  set  up  the  privilege  of  another  person 
or  of  a  corporation  as  an  excuse  for  a  refusal  to  answer — in 
other  words,  the  privilege  is  that  of  the  witness  himself, 
and  not  that  of  the  partj^  on  trial."  (Mr.  Justice  Brown.) 
M'Alister  v.  Henkel,  201  U.  S.  90,  91  (1906). 

§  584.  Breadth  of  Present  Immunity  Statutes. 

The  immunity  obtained  by  the  witness  under  the  law  is 
broader  than  the  privilege  given  by  the  Fifth  Amendment, 
in  that  he  is  personally  immunized  as  to  the  offense 
charged  in  the  indictment;  and  this  is  true  whether  the 
particular  evidence  given  by  the  witness  be  incriminating 
or  not.  U.  S.  v.  Armour  &  Co.,  142  Fed.  808,  822.  (D. 
C— N.  D.  Illinois,  1906.) 

§  585.  No  Immunity  for  Corporation,  but  Possibly  for  Officer 

or  Agent. 

Under  the  immunity  statute  there  can  be  no  immunity 

for  a  corporation  as  to  disclosing  incriminating  facts.    An 

officer  or  agent  of  such  corporation,  however,  may  if  the 


2G6  Manual  of  thio  Sherman  Law 

facts  bring  him  pcM-sonall}'  within  the  purview  of  the  law, 
plead  such  immunity.  U.  S.  v.  Armour  &  Co.,  142  Fed. 
808,  818.    (D.  C— N.  D.  Illinois,  1906.) 

A  corporation  is  a  creature  of  the  state,  and  is  subject 
to  the  special  laws  determining  its  privileges  and  to  the 
limitations  of  its  charter.  There  is  a  reserved  right  in  the 
legislature  to  investigate  its  contracts  and  find  out  if  it 
has  exceeded  its  powers.  "While  an  individual  may  law- 
fully refuse  to  answer  incriminating  questions  unless  pro- 
tected by  an  immunity  statute,  it  does  not  follow  that  a 
corporation  invested  with  special  privileges  and  fran- 
chises, may  refuse  to  show  its  hand  when  charged  with  an 
abuse  of  such  privileges."  (Mr.  Justice  Brown.)  Hale  v. 
Henkel,  201  U.  S.  43,  74-75  (1906). 

§  586.  No  Necessity  to  Claim  Immunity. 

It  is  not  necessary  for  a  witness  to  claim  immunity 
under  the  law.  The  immunity  flows  to  the  witness  by 
action  of  law  and  without  any  claim  on  his  part.  U.  S.  v. 
Armour  &  Co.,  142  Fed.  808,  822  (D.  C— N.  D.  Illinois, 
1916),  and  cases  cited. 

§  587.  Defendants  Called  as  Witnesses  by  Co-defendants. 

"It  was  not  the  intention  of  Congress  in  passing  the 
immunity  act  for  the  enforcement  of  the  provisions  of  the 
Sherman  Law,  either  in  civil  or  criminal  proc(>edings,  to 
extend  immunity  to  defendants  called  as  witnesses  by  co- 
defendants  to  testify  in  the  latter 's  behalf."  Holland, 
District  Judge.)  U.  S.  v.  Standard  Sanitary  MJg.  Co.,  187 
Fed.  232,  237.    (C.  C— E.  D.  Penn.  1911.) 

§  588.  Sworn  Answers  of  Defendants  to  Government  Bill  in 
Equity. 

Defendants  to  a  bill  in  equity  brought  by  the  govern- 


Witnesses  267 

ment  under  Section  4  of  the  Act  who  file  sworn  answers 
thereto,  the  bill  not  waiving  answers  under  oath,  are  not 
therebj''  rendered  immune  under  the  Immunity  Statute, 
such  answers  not  being  testimony  or  production  of  evi- 
dence under  oath  in  obedience  to  a  subpoena  within  the 
meaning  of  said  statute.  U.  S.  y.  Standard  Sanitary  Mfg. 
Co.,  187  Fed.  229,  230.  (D.  C— E.  D.  Michigan,  S.  D. 
1911.) 

§  589.  Effect  of  Immunity  Under  State  Statute. 

The  fact  that  an  immunity  granted  to  a  witness  under 
a  state  statute,  would  not  prevent  a  prosecution  of  such  a 
witness  for  the  violation  of  a  federal  statute,  does  not  in- 
validate such  state  statute,  under  the  Fourteenth  Amend- 
ment.   Hale  V.  Henkel,  201  U.  S.  43,  68-69  (1906). 

§  590.  Effect  of  Federal  Immunity  upon  State  Courts. 

That  a  federal  immunity  statute  offers  no  immunity 
from  prosecution  in  the  state  courts,  is  no  answer  if  the 
witness  is  protected  against  future  prosecution  at  the  in- 
stance of  the  federal  government.  Hale  v.  Henkel,  201 
U.  S.  43,  68  (1906). 

§  591.  Contempt:  Prohibition  must  be  Clearly  Defined. 

"The  order  alleged  to  be  violated  must  not  only  come 
clearly  within  the  competency  of  the  court  to  make,  but 
the  thing  or  act  enjoined  must  be  clearly  and  definitely 
defined,  so  as  to  leave  the  party  enjoined  in  no  reasonable 
doubt  or  uncertainty  as  to  what  specific  thing  or  act  is 
prohibited."  (Philips,  District  Judge.)  U.  S.  v.  Atchi- 
son, T.  &  S.  F.  Ry.  Co.,  142  Fed.  176,  182-183.  (C.  C— 
W.  D.  Missouri,  W.  D.  1905.) 

§  592.  Information  in  Contempt  Proceedings. 

An  information  against  one  Agler  for  contempt  of  court 


268  Manual  of  the  Sherman  Law 

in  disobeying  an  injunction  "lacks  considerable  of  having 
the  certaint}^  and  precision  that  is  essential,"  where  "it  is 
not  alleged  that  this  man  was  one  of  the  unknown  parties 
that  are  referred  to  in  the  injunction,  .  .  .  that  the  re- 
straining order  was  a  lawful  one,  in  the  language  of  the 
statute,"  and  "  that  either  by  his  words  or  acts,  he  was  en- 
gaged in  aiding  the  common  object  with  other  meml^ers 
of  the  American  Railway  Union."  (Baker,  District 
Judge.)  U.  S.  v.  Agler,  62  Fed.  824,  828.  (C.  C.  Indiana, 
1894.) 

§  593.  Lack  of  Jurisdiction. 

"It  is  always  permissible  to  show,  upon  process  for 
contempt,  that  the  order  obeyed  was  beyond  the  jurisdic- 
tion of  the  authority  from  which  it  emanated.  If  that 
showing  is  successfully  made,  no  punishable  contempt  has 
been  committed."  (Philips,  District  Jiuige.)  U.  S.  v. 
Atchison,  T.  &  S.  F.  Ry.  Co.,  142  Fed.  176,  182  (C.  C— 
W.  D.  Missouri,  W.  D.  1905),  quoting  from  Sit.  Louis, 
etc.,  Railroad  Co.  v.  Wear,  135  Mo.  230,  265. 

§  594.  Cannot  Disobey  Injunction  Because  Bill  is  Demur- 
rable. 
"  There  is  not  an  authority,  in  the  judgment  of  the  court, 
that  can  be  found  in  the  books — certainly  the  court  is 
aware  of  none — in  which  it  has  ever  been  held  that  a  man 
who  was  enjoined  and  had  violated  the  injunction  could 
escape  punishment  by  alleging  that,  at  the  time  the  writ 
of  injunction  was  issued,  the  bill  was  demurrable." 
(Baker,  District  Judge.)  U.  S.  v.  Agler,  62  Fed.  824,  826. 
(C.  C.  Indiana,  1894.) 

§  595.  Criminal  Contempt.    Reasonable  Doubt. 

An  alleged  failure  of  a  defendant  to  comply  with  an  in- 


Witnesses  269 

junction  granted  upon  a  bill  in  equity  brought  by  the 
United  States  under  the  Act  belongs  to  what  are  termed 
"criminal  contempts."  "As  such  the  proceeding  is  to  be 
strictly  construed  in  favor  of  the  personal  liberty  of  the 
defendant.  As  it  is  to  vindicate  the  dignity  of  the  court 
in  compelling  respect  for  its  mandate,  a  judge  may  best 
demonstrate  his  title  to  respect  by  according  to  the  ac- 
cused the  benefit  of  any  reasonable  doubt  in  his  own 
mind  as  to  the  obligatory  force  of  his  command,  and 
whether  or  not  its  disobedience  was  willful."  (Phillips, 
District  Jiidge.)  U.  S.  v.  Atchison,  T.  &  S.  F.  Rij.  Co., 
142  Fed.  176,  181-182.  (C.  C— W.  D.  Missouri,  W.  D. 
1905.) 

§  596.  Inquisitorial  Power  of  Grand  Jury. 

"A  grand  jury  has  certain  inquisitorial  powers — and  by 
this  is  meant  the  power  of  instituting  an  investigation  to 
discover  whether  a  particular  crime  has  been  committed — 
is  also  a  proposition  which  has  been  frequently  affirmed 
by  the  courts  of  this  country;  but  as  to  the  extent  and 
limitation  of  this  power  there  is  pronounced  divergence  of 
opinion."  (Wallace,  Circuit  Judge.)  In  re  Hale,  139 
Fed.  496,  498.    (C.  C— S.  D.  New  York,  1905.) 

§  697.  Interference  with  Receiver. 

"  Any  willful  attempt  by  any  one  with  knowledge  that 
the  road  (railroad)  is  in  the  hands  of  the  court,  to  prevent 
or  impede  the  receiver  from  complying  with  the  order  of 
the  court  in  running  the  road,  when  the  attempt  is  unlaw- 
ful, and  as  between  private  individuals,  would  give  a  right 
of  action  for  damages,  is  a  contempt  of  the  order  of  the 
court."  (Taft,  Circuit  Judge.)  Thomas  v.  Cincinnati, 
N.  0.  &  T.  P.  Ry.  Co.,  62  Fed.  803,  816.  (C.  C— S.  D. 
Ohio,  W.  D.  1894.) 


270  Manual  of  the  Sherman  Law 

§  598.  Enticing  away  Employees  of  Receiver. 

Accordingly  it  has  been  held  that  maliciously  to  prevent 
the  operation  of  such  road  b}^  calling  out  the  receiver's  em- 
ployees is  punishable  as  a  contempt.  Thomas  v.  Cin- 
cinnati, N.  0.  &  T.  P.  Ry.  Co.,  62  Fed.  803,  816.  (C.  C— 
S.  D.  Ohio,  W.  D.  1894.) 

Quwre,  however,  as  to  application  of  Claj^ton  Act, 
Sect.  20,  in  modification  of  this  doctrine,  where  only  peace- 
ful means  are  used. 

§  599.  Writ  of  Error  or  Appeal  on  Judgment  for  Contempt. 
A  writ  of  error  may  l)e  prosecuted  by  a  witness  who  is 
not  a  party  to  the  original  suit  to  review  a  judgment  of 
contempt  against  him  for  disobeying  the  order  of  the  court 
to  answer  certain  questions  and  produce  certain  books  and 
papers;  such  judgment  constituting  practically  an  inde- 
pendent proceeding  and  amounting  to  a  final  judgment. 
A  mere  direction  of  the  court  to  answer  questions  or  to 
produce  written  evidence,  however,  is  not  a  final  decision 
but  is  interlocutory  and  collateral  in  the  principal  suit 
and  is  not  reviewable  by  appeal  or  writ  of  error.  Alexander 
V.  U.  S.,  201  U.  S.  117,  121-122  (1906)  and  cases  cited. 

§  600.  Punishment  for  Contempt  Under  Clayton  Act. 

Willful  disobe3dng  of  orders  or  process  of  the  court  meets 
with  summary  punishment  under  the  Cla\i;on  Act,  the 
procedure  relating  to  which  is  therein  fully  set  forth,  and 
the  most  striking  features  of  which  are  the  provisions 
made  for  jury  trial,  and  for  the  limitation  of  action  to 
within  one  year  from  the  act  complained  of.  Clayton  Act 
(Act  of  October  15,  1914),  Sects.  21-25. 

See  also  Chapter  on  the  Clayton  Act  herein  for  digest 
of  provisions. 


CHAPTER  XIX 


THE    CLAYTON    ACT 


§  601.  Claj^on  Act  in  General. 

Essentially  the  act  of  October  15,  1914,  popularly 
knowTi  as  the  "Clayton  Act"  is  complementary  to  the 
Sherman  Anti-trust  Act,  and  makes  no  material  changes 
therein  except  as  supplementing  the  same  and  enlarging 
the  individual  right  of  action.  By  the  provisions  of  this 
new  act,  any  person  may  enforce  his  rights  thereunder 
either  at  law  or  in  equity,  and  may  avail  himself,  as  prima 
facie  evidence  of  liability,  of  any  pertinent  decision  under 
the  Anti-trust  Acts  subsequently  rendered  in  the  federal 
courts  against  the  same  defendant  where  the  government 
was  plaintiff.  Certain  phases  of  price  discrimination,  ex- 
clusive use  conditions  of  patented  and  unpatented  articles, 
and  interlocking  directorates  are  expressly  forbidden. 
The  application  of  the  anti-trust  laws  to  labor,  agricul- 
tural, or  horticultural  organizations  is  left,  however,  some- 
what indefinite  and  obscure.  The  most  radical  feature  of 
the  new  act  is  the  placing  the  enforcement  of  certain  of  its 
provisions  into  the  hands  of  commissions,  who  are  given 
extensive  powers  of  investigation  although  in  the  last 
analysis  their  orders  to  be  actually  binding  must  be 
approved  by  the  circuit  court  of  appeals  having  juris- 
diction. 

§  602.  Commerce  Defined. 

"Commerce,"  as  used  in  the  Clayton  Act,  means  trade 

271 


272  Manual  of  the  Sherman  Law 

or  commerce  among  the  several  states,  and  with  foreign 
nations,  or  between  the  District  of  Columbia  or  any  terri- 
tory of  the  United  States  and  any  state,  territory  or  foreign 
nations,  or  between  any  insular  possessions  or  other  places 
under  the  jurisdiction  of  the  United  States,  or  between  any 
such  possession  or  place  and  any  state  or  territory  of  the 
United  States  or  the  District  of  Columbia  or  any  foreign 
nation,  or  within  the  District  of  Columbia  or  any  territory 
or  any  insular  possession  or  other  place  under  the  juris- 
diction of  the  United  States;  the  Philippine  Islands,  how- 
ever, being  expressly  excepted  from  the  ai)plication  of  the 
Act.    Act  of  October  15,  1914  (Clayton  Act),  Sect.  1. 

§  603.  *'  Person  "  or  "  Persons  "  Defined. 

The  word  "person"  or  "persons"  wherever  used  in 
the  Act  shall  be  deemed  to  include  corporations  and  asso- 
ciations existing  under  or  authorized  by  the  laws  of  either 
the  United  States,  or  the  laws  of  any  territory,  state  or 
foreign  country.  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  1. 

§  604.  Price  Discrimination. 

It  is  unlawful  f(jr  any  person  engaged  in  commerce,  in 
the  course  of  such  commerce,  cither  cUrectly  or  indirectly  to 
discriminate  in  price  between  different  purchasers  of  com- 
modities, which  commodities  are  sold  for  use,  consumption, 
or  resale  within  any  place  under  the  jurisdiction  of  the 
United  States,  if  the  effect  thereby  be  to  substantially 
lessen  competition  or  to  tend  to  create  a  monopoly, — 
except  on  account  of  differences  of  grade,  quantity,  qual- 
ity, cost  of  selling  or  transportation,  or  to  meet  competi- 
tion or  where  the  bona  fide  selection  of  customers,  not  in 
restraint  of  trade,  is  concerned.  Act  of  October  15,  1914 
(Clayton  Act),  Sect.  2. 


The  Clayton  Act  273 

§  605.  Exclusive  Use  Restrictions  or  Conditions  on  Patented 
or  Unpatented  Articles. 
It  is  unlawful  for  any  person  engaged  in  commerce,  in 
the  course  of  such  commerce,  to  lease  or  make  a  sale  or 
contract  for  the  sale  of  goods,  wares,  merchandise,  ma- 
chinery, supplies  or  other  commodities,  whether  patented 
or  unpatented,  for  use,  consumption  or  resale  within  any 
place  under  the  jurisdiction  of  the  United  States,  or  fix  a 
price  charged  therefor,  or  discount  from,  or  rebate  upon, 
such  price,  on  the  condition,  agreement  or  understanding 
that  the  lessee  or  purchaser  thereof  shall  not  use  or  deal  in 
the  goods,  wares,  merchandise,  machinery,  supplies  or 
other  commodities  of  a  competitor  of  the  lessor  or  seller 
where  the  effect  may  be  to  substantially  lessen  competi- 
tion or  tend  to  create  a  monopoly.  Act  of  October  15,  1914 
(Clayton  Act),  Sect.  3. 

§  606.  Extension  of  Action  at  Law  to  Include  Further  Of- 
fenses Forbidden  by  Act. 
Section  four  of  the  Act  is  substantially  the  same  as  sec- 
tion seven  of  the  Sherman  Anti-Trust  Act,  except  that  the 
characterization  of  the  plaintiff  as  "any  other  person  or 
corporation"  is  omitted,  that  the  defendant  may  also  be 
sued  where  he  has  an  agent,  and  that  the  words  "the  anti- 
trust laws"  are  substituted  for  corresponding  language  in 
the  latter,  and  made  to  include  not  only  the  things  de- 
clared to  be  unlawful  by  the  Sherman  Anti-Trust  Act  and 
amendments  but  also  the  additional  things  declared  to  be 
unlawful  by  the  Clayton  Act.  The  text  of  the  clause  is  as 
follows, — "Any  person  who  shall  be  injured  in  his  business 
or  property  by  reason  of  anything  forbidden  in  the  anti- 
trust laws  may  sue  therefor  in  any  district  court  of  the 
United  States  in  the  district  in  which  the  defendant  re- 
sides or  is  found  or  has  an  agent,  without  respect  to  the 


274  Manual  of  the  Sherman  Law 

amount  in  controversy,  and  shall  recover  threefold  the 
damages  by  him  sustained,  and  the  cost  of  suit,  includ- 
ing a  reasonable  attorney's  fee."  Act  of  October  15,  1914 
(Clayton  Act),  Sect.  4. 

§  607.  Effect  upon  Action  at  Law  of  Final  Judgment  or  Decree 
in  Government  Smts. 
A  final  judgment  or  decree  rendered  subsequent  to  the 
Act  in  any  criminal  prosecution  or  in  any  suit  or  proceed- 
ing in  equity  brought  by  or  on  behalf  of  the  United  States 
under  the  anti-trust  laws  to  the  effect  that  a  defendant  has 
violated  such  laws  shall  be  prima  facie  evidence  against 
such  defendant  in  any  court  or  proceeding  brought  by 
any  other  party  against  such  defendant  under  said  laws 
as  to  all  matters  respecting  which  said  judgment  or  decree 
would  be  an  estoppel  as  between  the  parties  thereto,  pro- 
vided such  judgments  or  decrees  were  not  entered  by  con- 
sent before  any  testimony  has  been  taken  after  the  date 
of  the  Act.     Act  of  October  15,  1914  (Clayton  Act),  Sect.  5. 

§  608.  Suspension  of  Running  of  Statute  of  Limitations  in 
Private  Actions. 
Whenever  any  suit  or  proceeding  in  equit.y  or  criminal 
prosecution  is  instituted  by  the  United  States  to  prevent, 
restrain  or  punish  violations  of  any  of  the  antitrust  laws, 
the  running  of  the  statute  of  limitations  in  respect  of  each 
and  every  private  right  of  action  arising  under  said  laws 
and  based  in  whole  or  in  part  on  any  matter  complained  of 
in  said  suit  or  proceeding  shall  be  suspended  during  the 
pendency  thereof.  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  5. 

§  609.  Labor,  Agricultural  or  Horticultural  Organizations. 

The  labor  of  a  human  being  is  not  a  commodity  or  ar- 
ticle of  commerce.    The  existence  and  operation  of  labor, 


The  Clayton  Act  275 

agricultural  or  horticultural  organizations,  instituted  for 
the  purposes  of  mutual  help,  and  not  having  capital  stock 
or  conducted  for  profit  is  not  forbidden  by  the  Act.  Nei- 
ther are  the  individual  members  of  such  organizations 
forbidden  or  restrained  from  carrying  out  the  legitimate 
objects  thereof,  nor  shall  such  organizations,  nor  the 
members  thereof  be  held  or  construed  to  be  illegal  com- 
binations or  conspiracies  in  restraint  of  trade,  under  the 
anti-trust  laws.  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  6. 

As  to  the  effect  of  this  section  upon  the  law  as  it  exist (m1 
prior  to  the  date  of  the  act,  see  Chapter  V,  Labor  Organiza- 
tions, herein. 

§  610.  Ownership  by  One  Corporation  of  the  Capital  Stock 
of  Another. 
All  corporations  engaged  in  interstate  commerce  are  for- 
bidden from  acquiring  directly  or  indirectly  the  stock  of 
one  another  where  the  effect  of  such  acquisition  or  voting 
of  the  stock  is  to  substantially  lessen  competition  between 
such  corporations  or  to  restrain  such  commerce  or  tend  to 
create  a  monopoly.  From  such  prohibition,  however,  are 
to  be  excluded  purchases  of  stock  solely  for  purposes  of 
investment  or  the  legitimate  formation  of  subsidiarj'- 
corporations  where  the  effect  is  not  to  substantially  lessen 
competition,  and  also  the  acquisition  of  stock  by  a  com- 
mon carrier  of  substantially  non-competing  branch  or 
extension  lines  located  so  as  to  become  feeders  to  the 
main  line  of  the  company,  or  as  a  part  of  its  system. 
Act  of  October  15,  1914  (Clayton  Act),  Sect.  7. 

§  611.  Interlocking  Directorates  and  Double  Employment. 

1.  Banks,  Banking  Associations  and  Trust  Companies. 
Generally  speaking  the  Act,  after  the  expiration  of  two 


27C  Manual  of  the  Sherman  Law 

ycais  from  the  date  of  its  enactment,  forbids  interlocking 
directorates  or  double  service  or  double  emplo\Tnent  in 
any  banking  concern  or  trust  company  of  any  person  who 
is  also  a  director  or  other  ofl&cer  or  employee  of  a  federal 
banking  concern  or  trust  company  independent  thereof 
and  having  deposits,  capital,  surplus  and  undivided  profits 
aggregating  more  than  $5,000,000.  Such  interlocking 
directorates  and  double  employment  are  also  forbidden 
regardless  of  said  amount  where  said  concerns  are  located 
in  the  same  place,  and  where  such  place  has  a  popula- 
tion of  more  than  two  hundred  thousand  as  shown  by  the 
last  census,  excepting,  however,  (1)  mutual  savings  banks 
not  having  a  capital  stock  represented  by  shares,  (2)  not 
more  than  one  other  banking  or  trust  concern  where  the 
entire  capital  stock  of  one  is  o'v^^led  by  the  stockholders 
in  the  other,  and  (3)  each  of  the  directors  of  class  A  of  a 
Federal  Reserve  Bank  who  may  also  be  both  an  officer  and 
director  in  one  member  bank. 

2.  Corporations  other  than  Banking  Concerns,  Trust 
Companies  and  Common  Carriers.  After  two  years  from 
date  of  the  Act,  interlocking  directorates  are  forbidden 
in  competing  corporations  engaged  in  interstate  or  foreign 
commerce  any  one  of  which  has  capital,  surplus  and  un- 
divided profits  aggregating  more  than  $1,000,000,  other 
than  banks,  banking  associations,  trust  companies  and 
common  carriers  subject  to  the;  Interstate  Commerce 
Act,  where  the  agreed  elimination  of  competition  be- 
tween them  would  violate  the  anti-trust  laws. 

The  eligiliility  of  any  director,  officer  or  employee  under 
either  of  the  clauses  of  this  section  is  to  be  determined  in 
accordance  with  the  provisions  of  the  Act  by  the  financial 
condition  of  the  corporation  at  th(>  end  of  th(^  fiscal  year 
next  preceding  his  election,  and  it  shall  ha  lawful  for  him 
when  duly  elected  or  selected  to  continue  in  his  office  or 


The  Clayton  Act  277 

employment  for  one  year  thereafter.     Ad  of  October  15, 
1914  (Clayton  Act),  Seet.  8. 

§  612.  Changes  in  Affairs  Affecting  Eligibility. 

When  any  person  is  eligible  and  is  elected,  chosen  or 
selected  as  a  director,  officer  or  employee  of  any  bank  or 
other  corporation  subject  to  the  Act,  such  eligibility  is  not 
affected  by  reason  of  any  change  in  its  affairs  from  whatso- 
ever cause  until  the  expiration  of  one  year  thereafter. 
Act  of  October  15,  1914  (Clayton  Act),  Sect.  8. 

§  613.  Embezzlement  by  Officers  or  Employees  of  Common 
Carriers. 

"Every  president,  director,  officer  or  manager  of  any 
firm,  association  or  corporation  engaged  in  commerce  as 
a  common  carrier,  who  embezzles,  steals,  abstracts  or  will- 
fully misapplies,  or  willfully  permits  to  be  misapplied, 
any  of  the  moneys,  funds,  credits,  securities,  property  or 
assets  of  such  firm,  association  or  corporation,  arising  or 
accruing  from  or  used  in  such  commerce,  in  whole  or  in 
part,  or  willfully  or  knowingly  converts  the  same  to  his 
own  use  or  to  the  use  of  another,  shall  be  deemed  guilty  of 
a  felony  and  upon  conviction  shall  be  fined  not  less  than 
$500  or  confined  in  the  penitentiary  not  less  than  one 
year  nor  more  than  ten  years,  or  both,  in  the  discretion  of 
the  court."    Act  of  October  15,  1914  (Clayton  Act),  Sect.  9. 

§  614.  Competitive  Bidding  in  Dealings  with  Common  Car- 
riers. 

After  two  years  from  the  date  of  the  Act,  any  common 
carrier  is  prohibited  from  having  dealings  in  articles  of 
commerce  or  contracts  for  construction  or  maintenance 
exceeding  $50,000  in  the  aggregate  in  any  one  year  where 
an  officer  or  selling  or  purchasing  agent  of  such  common 


278  Manual  of  the  Sherman  Law 

carrier  is  also  emploj'^od  b}'  or  has  a  substantial  interest 
in  the  party  with  whom  said  carrier  is  dealing  or  contract- 
ing, unless  such  dealings  are  with  the  bidder  whose  bid 
is  the  most  favorable  to  said  carriers  under  regulations  pre- 
scribed by  the  Interstate  Commerce  Commission.  In 
case  of  bidders,  names  and  addresses  are  required  to  be 
given  with  the  bid  as  set  forth  in  the  Act.  Provisions  are 
also  made  for  the  filing  of  full  and  detailed  statements 
within  thirty  days  after  the  transaction  or  purchase.  .\nd 
for  violations  of  the  above  provisions,  a  common  carrier 
shall  be  fined  not  exceeding  $25,000,  and  any  director, 
agent,  manager  or  officer  thereof  who  knowingly  par- 
ticipated or  aided  or  abetted  in  said  violations  shall  be 
deemed  guilty  of  a  misdemeanor  and  fined  not  exceeding 
$5,000,  or  confined  in  jail  not  exceeding  one  year  or  both. 
Act  of  October  15,1914  (Clayton  Act),  Sect.  10. 

§  615.  Enforcement  of  Compliance  with  Sections  Two,  Three, 
Seven  and  Eight. 
That  authority  to  enforce  compliance  with  sections  two, 
three,  seven  and  eight  of  this  Act  by  the  persons  re- 
spectively subject  thereto  is  hereby  vested:  in  the  Inter- 
state Commerce  Commission  where  applicable  to  common 
carriers,  in  the  F(>deral  Reserve  Board  where  a])plicable 
to  banks,  banking  associations  and  trust  comjjanies,  and 
in  the  Federal  Trade  Commission  where  applicable  to  all 
other  character  of  commerce.  Act  of  October  15,  1914 
(Clayton  Act),  Sect.  11. 

§  616.  Complaint  Under  the  Act. 

When  tiic  cunnnission  or  board  vested  with  jurisdiction 
thereof  has  reason  to  believe  any  person  has  violated  or 
is  violating  sections  two,  three,  seven  and  eight,  it  may 
issue  and  serve  upon  such  ])erson  a  complaint  thereof  con- 


The  Clayton  Act  279 

taining  a  notice  of  a  hearing  upon  a  place  and  a  date  therein 
fixed  at  least  thirty  days  after  service,  at  which  time  and 
place  such  person  may  appear  and  show  cause  why  he 
should  not  be  ordered  to  desist  from  violating  the  law  as 
charged.  For  good  cause  shown,  any  person  may  inter- 
vene in  person  or  by  counsel.  Upon  said  hearing  the 
testimony  is  to  be  reduced  to  writing  and  filed  and  if  the 
commission  decides  against  the  defendant  it  makes  a 
report  of  its  findings,  and  orders  such  defendant  to  cease 
and  desist  from  the  violations  complained  of,  and  divest 
itself  of  the  stock  held  or  rid  itself  of  the  directors  chosen 
contrary  to  the  provisions  of  the  Act.  Until,  however,  the 
filing  of  a  transcript  of  the  record  with  the  U.  S.  Circuit 
Court  of  Appeals  as  provided  by  the  Act,  the  said  report 
or  order  may  be  modified  or  set  aside  by  the  commission 
in  whole  or  in  part.  Act  of  October  15, 1914  (Clayton  Act), 
Sect.  11. 

§  617.  Proceedings  to  Enforce  Order  of  Commission. 

In  case  any  person  fails  or  neglects  to  obey  the  order 
of  the  commission  or  board,  it  may  apply  to  the  U.  S. 
Circuit  Court  of  Appeals  having  jurisdiction  for  the  en- 
forcement of  such  order,  at  the  same  time  filing  therewith 
a  transcript  of  the  entire  record,  of  which  apphcation  the 
defendant  shall  have  notice,  and  thereupon  such  court 
shall  affirm,  modify  or  set  aside  the  order  of  said  commis- 
sion; the  findings  of  said  commission,  however,  being  con- 
clusive as  to  the  facts  if  supported  by  testimony.  Act  of 
October  15,  1914  (Clayton  Act),  Sect.  11. 

§  618.  Application  to  Adduce  Additional  Evidence. 

Where  there  are  reasonable  grounds  for  not  presenting 
additional  evidence  of  a  material  character  before  the 
commission  or  board  at  the  time  of  the  hearing,  either 


280  Manual  of  the  Sherman  Law 

party  may  apply  to  the  court  for  leave  to  adduce  such  evi- 
dence, and  thereupon  the  court  upon  such  terms  and  con- 
ditions as  it  deems  proper  may  order  such  evidence  to  be 
taken  before  the  said  commission  or  board,  which  may 
accordingly  modify  or  add  to  its  previous  findings  and 
may  recommend  the  modification  or  setting  aside  of  its 
original  order.  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  11. 

§  619.  Review  by  Supreme  Court  upon  Certiorari. 

The  judgment  and  decree  of  the  U.  S.  Circuit  Court  of 
Appeals  shall  be  final,  except  that  the  same  shall  be  sub- 
ject to  review  upon  certiorari  as  provided  in  section  two 
hundred  and  forty  of  the  Judicial  Code.  Act  of  October  15, 
1914  (Clayton  Act),  Sect.  11. 

§  620.  Review  of  Order  of  Commission  by  Circuit  Court  of 
Appeals. 

Upon  the  filing  of  a  written  petition  prajdng  that  the 
order  of  the  commission  or  board  be  set  aside,  the  party 
subject  thereto  may  obtain  a  review  of  such  order  by  the 
U.  S.  Circuit  Court  of  Appeals.  After  service  of  such 
petition,  the  commission  or  board  files  its  transcript  of 
the  entire  record,  and  thereupon,  the  court  may  affirm,  set 
aside  or  modify  the  said  order  in  the  same  manner  as  in 
an  application  by  said  commission  or  board  to  enforce  its 
order.    Act  of  October  15,  1914  (Clayton  Act),  Sect.  11. 

§  621.  Exclusive  Jurisdiction  of  Circuit  Court  of  Appeals  of 
the  United  States. 
The  jurisdiction  of  the  Circuit  Court  of  Appeals  of  the 
United  States,  to  enforce,  set  aside,  or  modify  orders  of 
the  commission  or  board  shall  be  exclusive.  Act  of  Octo- 
ber 15,  1914  (Clayton  Act),  Sect.  11. 


The  Clayton  Act  281 

§  622,  Precedence  of  Proceedings  Relative  to  Orders  of 
Commission  or  Board. 
Such  proceedings  in  the  Circuit  Court  of  Appeals  shall 
1)6  given  precedence  over  all  other  cases  pending  therein, 
and  shall  be  in  every  way  expedited.  Act  of  October  13, 
1914  (Clayton  Act),  Sect.  11. 

§  623.  Order  Cannot  Relieve  Liability  Under  the  Anti-Trust 
Acts. 

No  order  of  the  commission  or  board  or  the  judgment 
of  the  court  to  enforce  the  same  shall  in  any  wise  relieve 
or  absolve  any  person  from  any  liability  under  the  anti- 
trust acts.    Act  of  October  15,  1914  (Clayton  Act),  Sect.  11. 

§  624.  Service  of  Complaints,  Orders  and  Other  Processes. 

Complaints,  orders,  and  other  processes  of  the  com- 
mission or  board  may  be  served  by  anyone  by  it  duly 
authorized,  either  (a)  by  delivering  a  copy  thereof  to  the 
person,  member  of  the  partnership,  or  executive  officer  or 
director  of  the  corporation,  to  be  served;  or  (b)  by  leaving 
a  copy  thereof  at  the  principal  office  or  place  of  business 
of  such  person;  or  (c)  by  registering  and  mailing  a  copy 
thereof  addressed  to  such  person  at  his  principal  office  or 
place  of  business.  A  verified  return  of  service  should  be 
made  as  required  by  the  Act.  Act  of  October  15,  1914 
(Clayton  Act),  Sect.  11. 

§  625.  Venue  of  Actions  Against  Corporations. 

That  any  suit,  action,  or  proceeding  under  the  anti-trust 
laws  against  a  corporation  may  be  brought  not  only  in 
the  judicial  district  whereof  it  is  an  inhabitant,  but  also 
in  any  district  wherein  it  may  be  found  or  transacts  busi- 
ness; and  all  process  in  such  cases  may  be  served  in  the 
district  of  which  it  is  an  inhabitant,  or  wherever  it  may  be 
found.    Act  of  October  15,  1914  (Clayton  Act),  Sect.  12. 


282  Manual  of  the  Sherman  Law 

§  626.  Where  Subpoena  for  Witnesses  may  Run. 

In  all  suits,  civil  or  criminal,  brought  by  the  United 
States  in  any  district  under  the  anti-trust  acts,  subpoena 
requiring  the  attendance  of  witnesses  may  run  into  any 
district,  except  that  in  civil  cases  the  permission  of  the 
trial  court  must  be  obtained  by  cause  shown  for  subpoena 
running  out  of  the  district  for  a  greater  distance  than  one 
hundred  miles.  Act  of  October  15,  WI4  (Clayton  Act), 
Sect.  13. 

§  627.  When  Violation  by  Corporation  is  also  Violation  by  its 
Officers. 
Whenever  a  corporation  shall  violate  any  of  the  penal 
provisions  of  the  anti-trust  laws,  such  violation  shall  be 
deemed  to  be  also  that  of  the  individual  directors,  officers, 
or  agents  of  such  corporation  who  shall  have  authorized, 
ordered,  or  done  any  of  the  acts  constituting  in  whole  or 
in  part  such  violation,  and  such  violation  shall  be  deemed 
a  misdemeanor,  and  upon  conviction  therefor  of  any  such 
director,  officer,  or  agent  he  shall  be  punished  by  a  fine  of 
not  exceeding  $5,000  or  by  imprisonment  for  not  exceeding 
one  year,  or  by  both,  in  the  discretion  of  the  court.  Act  of 
October  15,  1914  (Clayton  Act) ,  Sect.  14. 

§  628.  Proceedings  in  Equity  by  the  United  States. 

The  several  district  courts  of  the  United  States  have 
jurisdiction  to  prevent  and  restrain  violations  of  the  Act, 
and  proceedings  in  equity  may  be  instituted  and  parties 
brought  before  the  court,  in  the  same  manner  and  form 
as  under  sections  four  and  five  of  the  Sherman  Anti-Trust 
Act.    Act  of  October  15,  1914  (Clayton  Act),  Sect.  15. 

§  629.  Proceedings  in  Equity  by  a  Private  Person. 

A  radical  departure  i.s  made  from  the  Sherman  Anti- 


The  Clayton  Act  283 

Trust  Act  by  Section  16  of  the  Clayton  Act  which 
extends  the  right  of  injunctive  rehef  against  threatened 
loss  or  damage  by  a  violation  of  the  anti-trust  laws  to  any 
person,  firm,  corporation  or  association  likely  to  suffer 
thereby.  If  it  be  showTi  that  the  danger  of  irreparable 
damage  is  immediate,  a  preliminary  injunction  may  issue 
upon  the  execution  of  a  proper  bond  by  the  plaintiff.  No 
one,  however,  except  the  United  States  is  to  be  entitled 
to  bring  suit  for  injunctive  relief  against  any  common  car- 
rier subject  to  the  Interstate  Commerce  Act.  Act  of 
October  15,  1914  (Clayton  Act),  Sect.  16. 

§  630.  Issuance  of  Preliminary  Injunctions  and  Restraining 
Orders. 

While  the  Act  affirms  that  no  preliminary  injunction 
shall  be  issued  without  notice  to  the  opposite  party,  it  is 
nevertheless  provided  that  a  temporary  restraining  order 
may  be  granted  where  it  clearly  appears  from  specific 
facts  shown  by  affidavit  or  the  verified  bill  that  immediate 
and  irreparable  injury,  loss  or  damage  will  result  to  the 
apphcant  before  notice  can  be  served  and  a  hearing  had 
thereon.  The  term  of  such  order  is  not  to  exceed  ten  days, 
unless  extended  for  good  cause  shown,  and  the  party  ob- 
taining such  order  shall  promptly  proceed  with  the  matter 
of  the  issuance  of  a  preliminary  injunction  which  shall  take 
precedence  of  everything  except  older  matters  of  the  same 
character.  The  opposing  party  on  the  other  hand  may  call 
up  the  dissolution  or  modification  of  the  order  on  two  days' 
notice.    Act  of  October  15,  1914  (Clayton  Act),  Sect.  17. 

§  631.  Giving  of  Security  by  Applicant  for  Restraining  Order. 

Except  as  otherwise  provided  in  Section  16  of  this 
Act,  no  restraining  order  or  interlocutory  order  of  in- 
junction shall  issue,  except  upon  the  giving  of  security  by 


284  Manual  of  the  Sherman  Law 

the  applicant  in  such  sum  as  the  court  or  judge  may  deem 
proper,  conditioned  upon  the  payment  of  such  costs  and 
damages  as  may  be  incurred  or  suffered  by  any  party  who 
may  be  found  to  have  been  wrongfully  enjoined  or  re- 
strained thereby.  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  18. 

§  632.  Formal  Requisites  and  Scope  of  Injunction  and  Re- 
straining Order. 
Every  order  of  injunction  or  restraining  order  shall 
set  forth  the  reasons  for  the  issuance  of  the  same,  shall  be 
specific  in  terms,  and  shall  describe  in  reasonable  detail, 
and  not  by  reference  to  the  bill  of  complaint  or  other  docu- 
ment, the  act  or  acts  sought  to  be  restrained,  and  shall  be 
binding  only  upon  the  parties  to  the  suit,  their  officers, 
agents,  servants,  employees,  and  attorneys,  or  those  in 
active  concert  or  participating  with  them,  and  who  shall, 
by  personal  service  or  otherwise,  have  received  actual 
notice  of  the  same.  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  19. 

§  633.  Injunctions  and  Restraining  Orders  Between  Em- 
ployers and  Employees. 
No  injunction  or  restraining  onU^r  is  to  be  granted  in 
any  case  between  an  employer  or  employers  and  em- 
ployees, or  between  employees,  or  between  persons  em- 
l^loyed  or  persons  seeking  emplojrment,  involving,  or 
growing  out  of,  a  dispute  concerning  t(Tms  or  conditions  of 
employment  unless  ncicessarj-  to  pr(!veut  irreparable  in- 
jury where  there  is  no  adequate  remedy  at  law.  Act  of 
October  15,  1914  (Clayton  Act),  Sect.  20. 

§  634.  Peaceful   Persuasion,    Termination   of   Employment, 
Cessation  of  Patronage,  etc.,  not  to  be  Enjoined. 

No  such  restraining  order  or  injunction  sludl  ])rohil)it 


The  Clayton  Act  285 

any  i^erson  or  persons,  whether  singly  or  in  concert, 
from  terminating  any  relation  of  employment,  or  from 
ceasing  to  perform  an}^  work  or  labor,  or  from  recommend- 
ing, advising,  or  persuading  others  by  peaceful  means  so 
to  do;  or  from  attending  at  any  place  where  smy  such  per- 
son or  persons  may  lawfully  be,  for  the  puipose  of  peace- 
fully obtaining  or  communicating  information,  or  from 
peacefully  persuading  any  person  to  work  or  to  abstain 
from  working;  or  from  ceasing  to  patronize  or  to  employ 
any  party  to  such  dispute,  or  from  recommending,  ad- 
vising, or  persuading  others  by  peaceful  and  lawful  means 
so  to  do ;  or  from  paying  or  giving  to,  or  withholcUng  from, 
any  person  engaged  in  such  dispute,  any  strike  benefits  or 
other  moneys  or  things  of  value;  or  from  peaceably  as- 
sembling in  a  lawful  manner,  and  for  lawful  purposes;  or 
from  doing  an}'  act  or  thing  which  might  lawfully  be  done 
in  the  absence  of  such  dispute  by  any  party  thereto;  nor 
shall  any  of  the  acts  specified  in  this  paragraph  be  consid- 
ered or  held  to  be  violations  of  any  law  of  the  United 
States.     Act  of  October  15,  1914  (Clayton  Act),  Sect.  20. 

§  635.  Contempt  Proceedings. 

1.  Where  Act  or  Thing  Done  was  also  Criminal  Offense. 
Any  person  who  shall  willfully  disobey  any  lawful  writ, 
process,  order,  rule,  decree  or  command  of  any  district 
court  or  any  court  of  the  District  of  Columbia  may  be 
punished  for  contempt  where  the  act  or  thing  done  by  him 
was  also  a  criminal  offense  under  federal  or  state  laws.  On 
demand  of  the  accused  a  jury  trial  may  be  had,  and  if 
found  guilty  may  be  fined  if  a  natural  person  not  exceeding 
one  thousand  dollars  or  imprisoned  not  exceeding  six 
months.  As  in  other  criminal  cases,  a  bill  of  exceptions 
or  writ  of  error  will  lie  to  the  appellate  court.  Act  of  Octo- 
ber 15,  1914  (Clayton  Act),  Sects.  22  and  23. 


28()  Manual  of  the  Sherman  Law 

2.  Other  Forms  of  Contempt.  Contempts  committed  in 
the  presence  of  the  court,  or  so  near  thereto  as  to  obstruct 
the  administration  of  justice,  or  contempts  committed  in 
disobedience  of  any  lawful  writ,  process,  rule,  decree  or 
command  entered  in  any  suit  or  action  instituted  by  federal 
authority,  and  all  other  cases  of  contempt  not  specifically 
embraced  in  section  twenty-one  of  the  Act,  may  be 
punished  in  conformity  to  the  usages  at  law  and  in  equity 
now  prevailing.  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  24. 

3.  Limitation  of  Proceeding.  With  the  exception  of 
contempt  proceedings  pending  at  the  date  of  the  Act,  no 
proceeding  for  contempt  shall  be  instituted  against  any 
}ierson  unless  begun  within  one  year  of  the  act  com- 
])lained  of,  nor  shall  any  such  j^roceeding  be  a  bar  to  any 
criminal  prosecution  for  the  same  act  or  acts.  Act  of  Oc- 
tober 15,  1914  (Clayton  Act),  Sect.  25. 

§  636.  Effect  of  Invalid  Matter, 

If  any  clause,  sent(uice,  paragraph,  or  part  of  this  Act 
shall,  for  an}^  reason,  be  adjudged  by  any  court  of  com- 
petent jurisdiction  to  be  invalid,  such  judgment  shall  not 
affect,  impair,  or  invalidate  the  remainder  th(>reof,  but 
shall  be  confined  in  its  operation  to  the  clause,  sentence, 
]>aragraph,  or  part  thereof  directly  involved  in  the  con- 
troversy in  which  such  judgment  shall  have  been  ren- 
dered.   Act  of  October  15,  1914  (Clayton  Act),  Sect.  26. 


CHAPTER  XX 

THE    FEDERAL    TRADE    COMMISSION    AND    UNFAIR    TRADE 

§  637.  New  Regime  in  Remedial  Legislation. 

With  the  creation  of  the  Federal  Trade  Commission  is 
inaugurated  a  new  regime  in  remedial  legislation  for  the 
prevention  of  methods  of  unfair  competition  in  interstate 
commerce  through  the  monitorial  power  of  an  adminis- 
trative body.  With  the  exception  of  matters  relating  to 
banks  and  common  carriers,  this  commission  is  given 
power  of  its  own  volition  to  bring  before  it  any  person, 
partnership  or  corporation  and  to  compel  such  defendant 
or  defendants  to  show  cause  why  an  order  should  not  be 
entered  requiring  the  cessation  of  the  violations  of  law 
charged  in  the  complaint.  The  commission  also  has  very 
extensive  powers  of  investigation,  and  of  requiring  the 
filing  of  reports  from  all  persons  or  concerns  subject  to  its 
jurisdiction. 

§  638.  Personnel  of  the  Commission. 

The  Federal  Trade  Commission  is  composed  of  five 
members  appointed  by  the  President  by  and  with  the 
advice  and  consent  of  the  Senate,  and  not  more  than  three 
of  such  members  shall  be  of  the  same  political  party.  The 
ordinary  term  of  each  member  is  seven  years  except  in  case 
of  the  first  commissioners  appointed  who  are  to  serve  for 
varying  terms.  No  commissioner  shall  engage  in  any  other 
business,  vocation,  or  employment,  and  any  commissioner 
may  be  removed  by  the  President  for  cause.  Act  of 
September  26,  1914,  Sect.  1. 

287 


288  Manual  of  the  Sherman  Law 

§  639.  Bureau  of  Corporations  and  Commissioners  Abolished. 
Upon  the  organization  of  the  commission  and  the  elec- 
tion of  its  chairman,  the  Bureau  of  Corporations,  and 
the  office  of  Commissioner  and  Deputy  Commissioner  of 
Corporations  shall  cease  to  exist,  and  all  pencUng  investi- 
gations and  proceedings  of  such  bureau  shall  be  continued 
by  the  commission.    Act  of  September  26,  1914,  Sect.  3. 

§  640.  Principal  Office  and  Places  of  Meeting. 

The  principal  office  of  the  conunission  shall  be  in  the 
Cit}^  of  Washington,  but  it  may  meet  and  exercise  all  its 
powers  at  any  other  place.  The  commission  may,  by  one 
or  more  of  its  members,  or  by  such  examiners  as  it  may 
designate,  prosecute  any  inquiry  necessary  to  its  duties 
in  any  part  of  the  United  States.  Act  of  September  26, 
1914,  Sect.  3. 

§  641.  Persons  or  Concerns  Subject  to  Act. 

All  persons,  partnerships  or  corporations  engaged  in 
interstate  commerce,  except  banks  and  common  carriers 
subject  to  the  Acts  to  regulate  commerce,  are  liable  to 
prosecution  under  this  Act  if  the  commission  has  reason 
to  believe  that  such  persons,  partnerships  or  corporations 
have  been  or  are  using  any  unfair  method  of  competition 
in  interstate  or  foreign  commerce.  Act  of  September  26, 
1914,  Sect.  5. 

§  642.  Unfair  Methods  of  Competition. 

Unfair  methods  of  (•()ni])otiti()n  in  interstate  or  foreign 
commerce  are  declared  liy  the  Act  to  be  unlawful.  Act  of 
September  26,  1914,  Sect.  5. 

§  643,  Unfair  Competition  Defined. 

"The  essenc(>  of  the  wrong  in  unfair  competition  con- 


Federal  Trade  (.'ommission  and  Unfair  Tradk     289 

sists  in  the  sale  of  the  goods  of  one  manufacture  or  vendor 
for  those  of  another,  and  if  defendant  so  conducts  its  busi- 
ness as  not  to  palm  off  its  goods  as  those  of  complainant, 
the  action  fails."  {Mr.  Chief  Justice  F\jhijF,R.)  Howe  Scale 
Co.  V.  Wyckoff,  Seamans,  etc.,  198  U.  S.  118,  140  (1905). 

§  644.  General  Grounds  for  Prevention  of  Unfair  Competi- 
tion. 

Two  general  grounds  calling  for  equitable  relief  have 
been  recognized  by  the  courts,  "First,  to  secure  to  him 
who  has  been  instrumental  in  bringing  into  the  market 
a  superior  article  of  merchandise  the  fruit  of  his  industry 
and  skill,  and,  secondly,  to  protect  the  community  from 
imposition."  (Neil,  Special  Justice.)  C.  F.  Simmons 
Medicine  Co.  v.  Mansfield  Drug  Co.,  93  Tenn.  84  (1893). 

"Equity  gives  rehef  in  such  a  case,  upon  the  ground 
that  one  man  is  not  allowed  to  offer  his  goods  for  sale, 
representing  them  to  be  the  manufacture  of  another 
trader  in  the  same  commodity.  Suppose  the  latter  has 
obtained  celebrity  in  his  manufacture,  he  is  entitled  to  all 
the  advantages  of  that  celebrity,  whether  resulting  from 
the  greater  demand  for  his  goods  or  from  the  higher 
price  the  public  are  willing  to  give  for  the  article  rather 
than  for  the  goods  of  the  other  manufacturer,  whose  reputa- 
tion is  not  so  high  as  a  manufacturer."  {Mr.  Justice 
Clifford.)     McLean  v.  Fleming,  96  U.  S.  245,  251  (1877). 

§  645.  Scope  of  "  Unfair  Methods  of  Competition." 

Notwithstanding  that  the  words  "  Unfair  Competition" 
have  usually  been  given  a  somewhat  restricted  mean- 
ing by  the  courts,  not  being  interpreted  to  extend  beyond 
what  is  necessary  to  protect  a  manufacturer  in  his  use 
of  trade-names  and  signs,  methods  of  dressing  his  goods, 
and  advertising  the  same  both  where  there  is  or  is  not 


290  Manual  of  the  Sherman  Law 

involv(xl  the  question  of  any  exclusive  right,  it  would 
appear,  nevertheless,  that  the  words  "Unfair  Methods 
of  Competition"  as  used  in  the  Act  have  a  much 
broader  scope,  and  should  include  any  unfair  means  em- 
ployed by  a  manufacturer  or  merchant  to  injure  and  inter- 
fere with  the  business  of  a  competitor  whether  by  the 
passing  ofT  of  the  goods  of  the  former  as  the  goods  of  the 
latter,  or  by  interfering  with  his  contracts,  or  by  harassing 
or  interrupting  the  progress  of  his  trade  in  the  channels 
of  interstate  commerce.  The  use  of  the  words  "  Unfair 
Methods  of  Competition  "  instead  of  the  usual  words  "Un- 
fair Competition  "plainly  indicates  that  a  broad  interpreta- 
tion is  required,  and  that  any  unfair  method  whereby  one 
competitor  arbitrarily  restrains  or  obstructs  the  interstate 
or  foreign  trade  of  another  is  included  within  the  scope  of 
the  Act,  particularly  in  view  of  the  fact  that  the  commis- 
sion is  required  to  co-operate  with  the  federal  courts  in  the 
enforcement  of  the  Anti-trust  Acts. 

§  646.  Complaint  Under  the  Act. 

The  proceeding  under  the  act  is  instituted  by  the  com- 
mission when  they  have  reason  to  believe  that  a  case 
of  an  unfair  method  of  competition  is  presented,  and  that 
the  public  interest  requires  an  investigation.  A  complaint 
is  thereupon  prepared  and  served  upon  the  defendant  at 
least  thirty  days  before  the  date  set  for  hearing  therein, 
who  is  required  to  appear  before  the  commission  at  the 
time  and  place  designated  to  show  cause  why  an  order 
should  not  be  entered  against  him  for  violating  the  law. 
Any  person  for  cause  shown  may  int(Tvene  upon  proper 
application.    Act  of  September  26,  1914,  Sect.  5. 

§  647.  Testimony  and  Report. 
The  testimony  in  the  proceeding  is  reduced  to  writing 


I'KDKUAL  Trade  Commission  and  Unfair  Trade     291 

and  duly  filed,  and  in  case  that  the  commission  finds  that 
the  method  of  competition  is  prohibited  by  the  Act,  they 
prepare  a  written  report  of  their  findings  and  issue  an 
order  requiring  the  defendant  to  desist  from  using  such 
method.  The  commission  may  modify  or  set  aside  such 
report  in  whole  or  in  part  at  any  time  before  they  file  the 
same  in  the  United  States  Circuit  Court  of  Appeals  having 
jurisdiction.    Act  of  September  26,  1914,  Sect,  5. 

§  648.  Enforcement  of  Order. 

In  case  of  the  failure  of  any  defendant  to  comply  with 
the  order  of  the  Commission,  they  may  thereupon  apply 
to  the  U.  S.  Circuit  Court  of  Appeals  where  such  defend- 
ant resides,  carries  on  business,  or  has  used  the  alleged 
method  of  unfair  competition,  for  the  enforcement  of  such 
order,  filing  with  such  application  a  transcript  of  the  entire 
record.  Notice  is  thereupon  given  of  such  application  to 
the  defendant,  and  the  said  court  proceeds  in  due  course 
to  enter  a  decree  affirming,  modifying  or  setting  aside  the 
order  of  the  commission;  the  findings  of  the  commission 
as  to  the  facts  if  supported  by  the  testimony  being  con- 
clusive.   Act  of  September  26,  1914,  Sect.  5. 

§  849.  Additional  Evidence. 

Upon  a  proper  showing  of  reasonable  grounds  for  failure 
to  present  additional  evidence  at  the  hearing,  the  court 
on  application  of  either  party  may  order  such  additional 
evidence  to  be  taken  before  the  commission  in  such  manner 
and  upon  such  terms  and  conditions  as  to  the  court  shall 
seem  proper,  and  the  commission  may  modify  its  findings 
or  make  new  findings  accordingly.  Act  of  September  26, 
1914,  Sect.  5. 

§  650.  Review  by  Supreme  Court. 
The  judgment  and  decree  of  the  U.  S.  Circuit  Court  of 


292  Manual  of  the  Sherman  Law 

Appeals  shall  be  final  except  that  the  same  shall  Im  subject 
to  review  by  the  Supreme  Court  upon  certiorari  as  pro- 
vided in  the  Judicial  Code.  Ad  of  September  26,  1914, 
Sect.  5. 

§  661.  Review  in  U.  S.  Circuit  Court  of  Appeals. 

Any  party  ordered  by  the  commission  to  desist  from 
using  methods  declared  bj^  them  to  be  methods  of  unfair 
competition,  may  have  the  said  order  reviewed  by  the 
U.  S.  Circuit  Court  of  Appeals  upon  the  filing  of  a  proper 
written  petition.    Act  of  September  26,  1914,  Sect.  5. 

§  662.  Exclusive  Jurisdiction  of  U.  S.  Circuit  Court  of  Ap- 
peals. 
The  jurisdiction  of  the  U.  S.  Circuit  Court  of  Appeals 
to  enforce,  set  aside,  and  modify  orders  of  the  commission 
.shall  be  exclusive.    Act  of  September  26,  1914,  Sect.  5. 

§  653.  Expediting  of  Proceedings  Under  the  Act. 

Such  proceedings  in  the  U.  S.  Circuit  Court  of  Appeals 
shall  be  given  precedence  over  all  other  cases  ]5ending 
therein,  and  shall  be  in  every  way  expedited.  Act  of 
September  26,  1914,  Sect.  5. 

§  654.  No  Relief  from  Liability  Under  the  Anti-Trust  Acts. 

No  order  of  the  commission  or  judgment  of  the  court 
to  enforce  the  same  shall  in  any  wise  relieve  or  absolve 
any  person,  partnership  or  corporation  from  any  liability 
under  the  anti-trust  acts.  Act  of  September  26,  1914, 
Sect.  5. 

§  666.  Additional  Powers  of  Commission. 

The  commission  also  has  the  power  to  gather  and  com- 
pile and  to  investigate  the  affairs  of  any  corporation  en- 
gaged in  interstate  or  foreign  commerce,  excepting  banks 


Federal  Tiiade  Commission  and  Unfair  Trade     293 

and  common  carriers  subject  to  the  Act  to  Regulate  Com- 
merce; to  require  such  corporation  l)y  general  or  special 
orders  to  file  sworn  reports  or  answers  relative  to  its 
organization,  business,  practices,  etc.,  required  by  the 
commission;  to  investigate  upon  its  own  initiative  and 
report  the  manner  in  which  decrees  under  the  anti-trust 
acts  are  being  carried  out  b}-  an}^  defendant  corporations; 
to  investigate  and  report  at  the  request  of  the  President 
or  either  House  of  Congress  the  facts  relating  to  any  al- 
leged violations  of  the  anti-trust  acts  by  any  corporation; 
to  investigate  at  the  application  of  the  Attorney-General 
and  make  recommendations  for  the  readjustment  of  the 
business  of  any  corporation  alleged  to  be  violating  the 
antitrust  acts;  to  publish  such  portions  of  the  information 
obtained  l^y  it,  except  trade  secrets  and  names  of  cus- 
tomers, as  it  shall  deem  expedient  in  the  public  interest; 
to  make  annual  and  special  reports  to  Congress  with 
recommendations  for  additional  legislation;  to  provide 
for  the  publication  of  its  reports;  to  classify  corporations 
and  to  make  rules  and  regulations  for  carrying  out  the 
provisions  of  this  Act ;  and  to  investigate  and  report  upon 
trade  conditions  in  and  with  foreign  countries  where  the 
foreign  trade  of  the  United  States  may  be  affected.  Act 
of  September  26,  1914,  Sect.  6. 

§  656.  Further  Powers  of  Commission  given  by  Clayton  Act. 

Except  as  regards  common  carriers  subject  to  the 
Interstate  Commerce  Act,  banking  concerns  and  trust 
companies,  the  commission  is  given  authority  to  enforce 
compliance  with  sections  two,  three,  seven  and  eight  of 
the  Clayton  Act.  Act  of  October  15,  1914  (Clayton  Act), 
Sect.  11. 

Section  two  with  certain  exceptions  is  levelled  against 
discriminations  in  price  between  different  purchasers  of 


294  Manual  of  the  Sherman  Law 

commodities  where  tiie  effect  of  such  discrimination  is  to 
substantially  lessen  competition  or  to  tend  to  create  a 
monopoly;  section  three  is  directed  against  exclusive  use 
agreements  or  conditions  in  coimection  with  both  patented 
and  unpatented  articles  where  the  effect  is  to  substan- 
tially lessen  competition  or  to  tend  to  create  a  monopoly; 
section  seven  prohibits  the  acquisition  by  a  corpora- 
tion of  the  stock  of  a  competing  corporation  othervvase 
than  solely  for  investment  purposes  or  the  formation  of 
mere  subsidiary  corporations,  where  the  effect  of  such 
acquisition  is  substantially  to  lessen  competition  between 
them  or  to  restrain  commerce  or  to  tend  to  create  a 
monopoly;  and  section  eight  so  far  as  concerns  the  Federal 
Trade  Commission  denounces  and  forbids  interlocking 
directorates  after  two  years  from  the  passage  of  the  act 
in  corporations  subject  to  the  supervision  of  the  commis- 
sion, where  such  corporations  have  a  capital,  surplus  and 
undivided  profits  aggregating  more  than  $1,000,000,  and 
where  such  corporations  are  competitors  so  that  the  elim- 
ination of  competition  by  agreement  between  them  would 
constitute  a  violation  of  the  anti-trust  laws.  Act  of  Octo- 
ber 15,  1914  (Clayton  Act),  Sects.  2,  3,  7  and  8. 

§  657.  Form  of  Decree  in  Anti-Trust  Cases. 

In  a  suit  in  equity  brought  under  the  anti-trust  laws  at 
the  instance  of  the  Attorney  General,  the  federal  court, 
at  the  conclusion  of  the  testimony  if  then  of  the  opinion 
the  complainant  is  entitled  to  relief,  may  refer  such  suit 
to  the  commission  as  a  master  in  chancery  to  ascertain 
and  report  an  appropriate  form  of  decree.  Act  of  Septem- 
ber 26,  1914,  Sect.  7. 

§  658.  Right  to  Copy  Documentary  Evidence  of  Corporation. 

For  the  i)uii)(jses  of  this  Act,  the  coniniission  or  its  duly 


Federal  Trade  Commission  and  Unfair  Trade     295 

authorized  agent  or  agents,  shall  at  all  reasonable  times 
have  access  to  for  the  purpose  of  examination,  and  the 
right  to  copy  any  documentary  evidence  of  any  corpora- 
tion being  investigated  or  proceeded  against.  Act  of 
September  26,  1914,  Sect.  8. 

§  659.  Witnesses. 

The  commission  has  the  power  to  require  the  attendance 
of  witnesses  and  the  production  of  documentary  evidence, 
by  subpoena  from  anywhere  in  the  United  States,  and  in 
case  of  disobedience  to  a  subpoena  the  aid  of  any  federal 
court  may  be  invoked.  Any  of  the  federal  district  courts 
within  whose  jurisdiction  the  inquiry  is  carried  on,  in 
case  of  refusal  to  obey  a  subpoena  issued  by  the  commis- 
sion, may  issue  an  order  requiring  the  witness  to  appear 
Vjefore  the  commission  or  to  produce  documentary  evi- 
dence if  so  ordered,  or  to  give  evidence  touching  the  mat- 
ter in  question,  and  any  failure  to  obey  such  order  may 
be  punished  by  said  court  as  a  contempt  thereof.  Act  of 
September  26,  1914,  Sect.  9. 

§  660.  Mandamus. 

Upon  the  application  of  the  Attorney  General  of  the 
United  States,  at  the  request  of  the  commission,  the  dis- 
trict courts  of  the  United  States  shall  have  jurisdiction  to 
issue  writs  of  mandamus  commanding  any  person  or  cor- 
poration to  comply  with  the  provisions  of  the  Act  or  any 
order  of  the  commission  made  in  pursuance  thereof.  Act 
of  September  26,  1914,  Sect.  9. 

§  661.  Depositions. 

The  commission  may  order  testimony  to  be  taken  by 
deposition  at  any  stage  of  the  proceedings.  Act  of  Septem- 
ber 26,  1914,  Sect.  9. 


296  Manual  of  the  Sherman  Law 

§  662.  Immunity. 

No  person  may  refuse  to  testify  or  to  produce  docu- 
mentary evidence  on  the  ground  of  incrimination  or  for- 
feiture, but  no  natural  person  shall  be  prosecuted  or 
subjected  to  any  penalty  or  forfeiture  thereby  except  for 
perjury.    Act  of  September  26,  1914,  Sect.  9. 

§  663.  Refusal  to  Testify. 

Failure  to  testify  or  to  i:)roduce  documentary  evidence 
in  compliance  with  subpoena  if  within  the  power  of  the 
witness  so  to  do  is  punished  by  a  fine  of  not  less  than 
$1,000  or  more  than  $5,000,  or  imprisonment  for  not  more 
than  one  year,  or  by  both  such  fine  and  imprisonment. 
Act  of  September  26,  1914,  Sect.  10. 

§  664.  False  Returns  or  Reports. 

False  entries  or  statements  of  fact  in  reports  required 
under  the  Act,  or  failure  by  a  corporation  to  keep  full, 
true  and  correct  entries,  or  willful  removal  out  of  the 
United  States,  or  mutilation,  alteration  or  falsification  of 
accounts,  records  or  memoranda  of  such  corporation,  or 
refusal  by  such  corporation  to  submit  its  documentary 
evidence,  is  punished  by  a  fine  of  not  less  than  $1,000  or 
more  than  $5,000,  or  by  imjorisonmont  of  not  more  than 
three  years,  or  both  such  fine  and  imprisonment.  Act  of 
September  26,  1914,  Sect.  10. 

§  665.  Failure  of  Corporation  to  File  Annual  and  Special 
Reports. 
P"'ailure  of  a  corporation  to  file  any  required  annual  or 
special  report  before  the  exjiiration  of  thirty  days  after 
notice  of  its  default  is  su])ject  to  a  forfeiture  to  the  United 
States  of  the  sum  of  $100  for  each  and  every  day  of  the 
continuance  of  such  failure.  Act  of  September  26,  1914, 
Sect.  10. 


Federal  Tkade  Commission  and  Unfair  Trade     297 

§  666.  Unlawful  Publication  by  Officer  of  Commission. 

Any  officer  or  employee  of  the  commission  who  shall 
make  public  any  information  obtained  by  the  commission 
without  its  authority,  unless  directed  by  a  court,  shall 
be  deemed  guilty  of  a  misdemeanor,  and,  upon  conviction 
thereof,  shall  be  punished  by  a  fine  not  exceeding  $5,000, 
or  by  imprisonment  not  exceeding  one  year,  or  by  fine  and 
im[)risonment,  in  the  discretion  of  the  court.  Act  of 
September  26,  1914,  Sect.  10. 

§  667,  Not  to  Prevent  or  Interfere  with  the  Enforcement  of 
Other  Acts. 
Nothing  contained  in  this  act  shall  be  construed  to 
prevent  or  interfere  with  the  enforcement  of  the  provisions 
of  the  anti-trust  acts  or  the  acts  to  regulate  commerce,  nor 
shall  anything  contained  in  the  act  be  construed  to  alter, 
modify,  or  repeal  the  said  anti-trust  acts  or  the  acts  to 
regulate  commerce  or  any  part  or  parts  thereof.  Act  of 
September  26,  1914,  Sect.  11. 


APPENDIX 

THE  SHERMAN  LAW 

(Act  of  July  2,  1890,  26  Stat.  209) 

AN  ACT  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of 
the  United  States  of  America  in  Congress  assembled, 

Sec.  1.  Every  contract,  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy,  in  restraint  of  trade  or 
commerce  among  the  several  States,  or  with  foreign  na- 
tions, is  hereby  declared  to  be  illegal.  Every  person  who 
shall  make  any  such  contract  or  engage  in  any  such  com- 
bination or  conspiracy,  shall  be  deemed  guilty  of  a  mis- 
demeanor, and,  on  conviction  thereof,  shall  be  punished 
by  fine  not  exceeding  five  thousand  dollars,  or  by  imprison- 
ment not  exceeding  one  year,  or  by  both  said  punishments, 
in  the  discretion  of  the  court. 

Sec.  2.  Every  person  who  shall  monopolize,  or  attempt 
to  monopolize,  or  combine  or  conspire  with  any  other 
person  or  persons,  to  monopolize  any  part  of  the  trade  or 
commerce  among  the  several  States,  or  with  foreign  na- 
tions, shall  be  deemed  guilty  of  a  misdemeanor,  and,  on 
conviction  thereof,  shall  be  punished  by  fine  not  exceeding 
five  thousand  dollars,  or  by  imprisonment  not  exceeding 
one  year,  or  by  both  said  punishments,  in  the  discretion  of 
the  court. 

Sec.  3.  Every  contract,  combination  in  form  of  trust 
or  otherwise,  or  conspiracy,  in  restraint  of  trade  or  com- 

299 


300  Appendix 

merce  in  any  Territory  of  the  United  States  or  of  the  Dis- 
trict of  Columbia,  or  in  restraint  of  trade  or  commerce 
between  any  such  Territory  and  another,  or  between  any 
such  Territory  or  Territories  and  any  State  or  States  or  the 
District  of  Columbia,  or  with  foreign  nations,  or  between 
the  District  of  Columbia  and  any  State  or  States  or  foreign 
nations,  is  hereby  declared  illegal.  Every  person  who 
shall  make  any  such  contract  or  engage  in  any  such  com- 
bination or  conspiracy,  shall  be  deemed  guilty  of  a  mis- 
demeanor, and,  on  conviction  thereof,  shall  be  punished 
l)y  fine  not  exceeding  five  thousand  dollars,  or  by  imprison- 
ment not  exceeding  one  year,  or  by  both  said  punishments, 
in  the  discretion  of  the  court. 

Sec.  4.  The  several  circuit  courts  of  the  United  States 
are  hereby  invested  with  jurisdiction  to  prevent  and  re- 
strain violations  of  this  act;  and  it  shall  be  the  duty  of  the 
several  district  attorneys  of  the  United  States,  in  their 
respective  districts,  under  the  direction  of  the  Attorney 
General,  to  institute  proceedings  in  equity  to  prevent  and 
restrain  such  violations.  Such  proceedings  may  be  by 
way  of  petition  setting  forth  the  case  and  praying  that 
such  violation  shall  ])e  enjoined  or  otherwise  prohibited. 
When  the  parties  complained  of  shall  have  ])een  duly  noti- 
fied of  such  petition  the  court  shall  proceed,  as  soon  as 
may  be,  to  the  hearing  and  determination  of  the  case;  and 
pending  such  petition  and  before  final  decree,  the  court 
may  at  any  time  make  such  temporary  restraining  order 
or  prohibition  as  shall  be  deemed  just  in  the  premises. 

Sec.  5.  Whenever  it  shall  appear  to  the  court  before 
w^hich  any  proceeding  under  section  four  of  this  act  may 
be  pending,  that  the  ends  of  justice  require  that  other 
))arties  should  be  brought  before  the  court,  the  court  may 
cause  them  to  be  summoned,  whether  they  reside  in  the 
district  in  which  the  court  is  held  or  not;  and  subpoenas 


Wilson  Tariff  Act  Amkndments  301 

to  that  end  may  be  served  in  any  district  ])y  the  marshal 
thereof. 

Sec.  6.  Any  property  owned  under  any  contract  or  by 
any  combination,  or  pursuant  to  any  conspiracy  (and  be- 
ing the  subject  thereof)  mentioned  in  section  one  of  this 
act,  and  being  in  the  course  of  transportation  from  one 
State  to  another,  or  to  a  foreign  country,  shall  be  forfeited 
to  the  United  States,  and  may  be  seized  and  condemned 
l)y  like  proceedings  as  those  provided  by  law  for  the  for- 
feiture, seizure,  and  condemnation  of  property  imported 
into  the  United  States  contrary  to  law. 

Sec.  7.  Any  person  who  shall  be  injured  in  his  business 
or  property  by  any  other  person  or  corporation  by  reason 
of  anything  forbidden  or  declared  to  be  unlawful  by  this 
act,  may  sue  therefor  in  any  circuit  court  of  the  United 
States  in  the  district  in  which  the  defendant  resides  or  is 
found,  without  respect  to  the  amount  in  controversy,  and 
shall  recover  threefold  the  damages  by  him  sustained, 
and  the  costs  of  suit,  including  a  reasonable  attorney's  fee. 

Sec.  8.  That  the  word  ''person,"  or  "persons,"  wher- 
ever used  in  this  act  shall  be  deemed  to  include  corpora- 
tions and  associations  existing  under  or  authorized  by  the 
laws  of  either  the  United  States,  or  the  laws  of  any  of  the 
Territories,  the  laws  of  any  States,  or  the  laws  of  any  for- 
eign country. 

ANTI-TRUST  AMENDMENTS  TO  THE  WILSON 
TARIFF  ACT  OF  AUGUST  27,  1894,  SECTIONS 
73-77. 

(28  Stat.  570) 

Sec.  73.  That  every  combination,  conspiracy,  trust, 
agreement,  or  contract  is  hereby  declared  to  be  contrary 
to  public  policy,  illegal,  and  void,  when  the  same  is  made 


302  Appendix 

l)y  or  betAveen  two  or  more  persons  or  corporations  either 
of  whom  is  engaged  in  importing  any  article  from  anj'  for- 
eign country  into  the  United  States,  and  when  such  com- 
bination, conspiracy,  trust,  agreement,  or  contract  is 
intended  to  operate  in  restraint  of  laAA^ul  trade,  or  free 
competition  in  lawful  trade  or  commerce,  or  to  increase  the 
market  price  in  any  part  of  the  United  States  of  any  ar- 
ticle or  articles  imported  or  intended  to  be  imported  into 
the  United  States,  or  of  any  manufacture  into  which  such 
imported  article  enters  or  is  intended  to  enter.  Every 
l)erson  who  is  or  shall  hereafter  l)e  engaged  in  the  importa- 
tion of  goods  or  any  conmiodity  from  any  foreign  country 
in  violation  of  this  section  of  this  act,  or  who  shall  combine 
or  conspire  with  another  to  violate  the  same,  is  guilty  of 
a  misdemeanor,  and  on  conviction  thereof  in  any  court  of 
the  United  States  such  person  shall  l)e  fined  in  a  sum  not 
less  than  one  hundred  dollars  and  not  exceeding  five  thou- 
sand dollars,  and  shall  be  further  punished  l)y  imprison- 
ment, in  the  discretion  of  the  court,  for  a  term  not  less 
than  three  months  nor  exceeding  twelve  months. 

Sec.  74.  That  the  several  circuit  courts  of  the  United 
States  are  hereby  invested  with  jurisdiction  to  prevent  and 
restrain  violations  of  section  seventy-three  of  this  act ;  and 
it  shall  be  the  duty  of  the  several  district  attorneys  of  the 
United  States,  in  their  respective  districts,  under  the 
direction  of  the  Attorney  General,  to  institute  proceedings 
in  equity  to  prevent  anfl  restrain  such  violations.  Such 
proceedings  may  be  by  way  of  petitions  setting  forth  the 
case  and  praying  that  such  violations  shall  be  enjoined  or 
otherwise  prohibited.  When  the  jiarties  complained  of 
shall  have  been  duly  notified  of  such  petition  the  court 
shall  proceed,  as  soon  as  may  be,  to  the  hearing  and  de- 
termination of  the  case;  and  pending  such  petition  and 
before  final  decree,  the  court  may  at  any  time  make  such 


Wilson  Tariff  Act  Amendments  303 

temporarj'  restraining  order  or  prohibition  as  shall  be 
deemed  just  in  the  premises. 

Sec.  75.  That  whenever  it  shall  appear  to  the  court 
before  which  any  proceeding  under  the  seventy-fourth 
section  of  this  act  may  be  pending  that  the  ends  of  justice 
require  that  other  parties  should  be  brought  before  the 
court,  the  court  may  cause  them  to  be  summoned,  whether 
they  reside  in  the  district  in  which  the  court  is  held  or  not ; 
and  subpoenas  to  that  end  may  be  served  in  any  district 
by  the  marshal  thereof. 

Sec.  76.  That  any  property  owned  under  any  contract 
or  by  any  combination,  or  pursuant  to  any  conspiracy 
(and  being  the  subject  thereof)  mentioned  in  section 
seventy-three  of  this  act,  and  being  in  the  course  of  trans- 
portation from  one  State  to  another  or  to  or  from  a  Terri- 
tory or  the  District  of  Columbia,  shall  be  forfeited  to  the 
United  States,  and  may  be  seized  and  condemned  by  like 
proceedings  as  those  provided  by  law  for  the  forfeiture, 
seizure,  and  condemnation  of  property  imported  into  the 
United  States  contrary  to  law. 

Sec.  77.  That  any  person  who  shall  be  injured  in  his 
business  or  property  by  any  other  person  or  corporation 
by  reason  of  anything  forbidden  or  declared  to  be  unlawful 
by  this  act,  may  sue  therefor  in  any  circuit  court  of  the 
United  States  in  the  district  in  which  the  defendant  re- 
sides or  is  found,  without  respect  to  the  amount  in  con- 
troversy, and  shall  recover  threefold  the  damages  by  him 
sustained,  and  the  cost  of  suit,  including  a  reasonable 
attorney's  fee. 

[The  foregoing  sections  were  expressly  preserved  in  the 
Dingley  Act  of  1897.  Section  34  of  that  act  (30  Stat.  213) 
concludes  as  follows:] 

And  further  provided,  That  nothing  in  this  act  shall  be 
construed  to  repeal  or  in  any  manner  affect  the  sections 


304  Appendix 

numbered  seventy-three,  seventy-four,  seventy-five, 
seventy-six,  and  seventy-seven  of  an  act  entitled  "An  act 
to  reduce  taxation,  to  provide  revenue  for  the  Govern- 
ment, and  for  other  purposes,"  which  became  a  law  on  the 
twenty-eighth  day  of  August,  eighteen  hundred  and 
ninety-four.     (Sects.  73  &  75  amended,  see  p.  345  et  seq.) 

THE  EXPEDITION  ACT 

(32  Stat.  823) 

AN  ACT  To  expedite  the  hearing  and  determination  of 
suits  in  equity  pending  or  hereafter  brought  under 
the  act  of  July  second,  eighteen  hundred  and  ninety, 
entitled   "An  act  to   protect  trade   and   commerce 
against  unlawful   restraints  and  monopolies,"   "An 
act  to  regulate  commerce,"  approved  February  fourth, 
eighteen  hundred  and  eighty-seven,  or  any  other  acts 
having  a  like  purpose  that  may  be  hereafter  enacted. 
Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assembled,  That 
in  any  suit  in  equity  pending  or  hereafter  brought  in  any 
circuit  court  of  the  United  States  under  the  act  entitled 
"An  act  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monopolies,"  approved  July  second, 
eighteen  hundred  and  ninety,  "An  act  to  regulate  com- 
merce," approved  February  fourth,  eighteen  hundred  and 
eighty-seven,  or  any  other  acts  having  a  like  purpose  that 
hereafter  may  be  enacted,  wherein  the  United  States  is 
complainant,  the  Attorney  General  may  file  with  the  clerk 
of  such  court  a  certificate  that,  in  his  opinion,  the  case  is 
of  general  public  importance,  a  copy  of  which  shall  be 
immediately  furnished  by  such  clerk  to  each  of  the  circuit 
judges  of  the  circuit  in  which  the  case  is  pending.    There- 


TriE  KxppiDiTioN  Act  305 

upon  such  case  shall  l)e  given  precedence  over  others  and 
in  every  way  expedited,  and  be  assigned  for  hearing  at  the 
earliest  practicable  day,  before  not  less  than  three  of  the 
circuit  judges  of  said  circuit,  if  there  be  three  or  more; 
and  if  there  be  not  more  than  two  circuit  judges,  then 
before  them  and  such  district  judge  as  they  may  select. 
In  the  event  the  judges  sitting  in  such  case  shall  be  divided 
in  the  opinion,  the  case  shall  be  certified  to  the  Supreme 
Court  for  review  in  like  manner  as  if  taken  there  by  ap- 
peal as  hereinafter  provided. 

Sec.  2.  That  in  every  suit  in  equity  pending  or  here- 
after brought  in  any  circuit  court  of  the  United  States 
under  any  of  said  acts,  wherein  the  United  States  is  com- 
plainant, including  cases  submitted  but  not  yet  decided, 
an  appeal  from  the  final  decree  of  the  circuit  court  will  lie 
only  to  the  Supreme  Court,  and  must  be  taken  within 
sixty  days  from  the  entry  thereof:  Provided,  That  in 
any  case  where  an  appeal  may  have  been  taken  from  the 
final  decree  of  a  circuit  court  to  the  circuit  court  of  appeals 
before  this  act  takes  effect,  the  case  shall  proceed  to  a 
final  decree  therein,  and  an  appeal  may  be  taken  from  such 
decree  to  the  Supreme  Court  in  the  manner  now  provided 
by  law. 

Approved,  February  11,  1903. 

(36  Stat.  854) 

AN  ACT  To  amend  an  act  entitled  "An  act  to  expedite 
the  hearing  and  determination  of  suits  in  equity 
pending  or  hereafter  brought  under  the  act  of  July 
second,  eighteen  hundred  and  ninety,  entitled  'An  act 
to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies,'  'An  act  to  regulate  com- 
merce,' approved  February  fourth,  eighteen  hundred 


306  Appendix 

and  eighty-seven,  or  any  other  acts  having  a  like  pur- 
pose that  may  be  hereafter  enacted,"  approved  Feb- 
ruary eleventh,  nineteen  hundred  and  three. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assembled,  That 
section  one  of  the  act  entitled  "An  act  to  expedite  the 
hearing  and  determination  of  suits  in  equity  pending  or 
hereafter  brought  under  the  act  of  Julj^  second,  eighteen 
hundred  and  ninety,  entitled  'An  act  to  protect  trade  and 
commerce  against  unlawful  restraints  and  monopolies,' 
'An  act  to  regulate  commerce,'  approved  February  fourth, 
eighteen"  hundred  and  eighty-seven,  or  any  other  acts 
having  a  like  purpose  that  may  be  hereafter  enacted," 
approved  February  eleventh,  nineteen  hundred  and  three, 
be,  and  the  same  is  hereby,  amended  so  as  to  read  as 
follows : 

"That  in  any  suit  in  equity  pending  or  hereafter  brought 
in  any  circuit  court  of  the  United  States  under  the  act  en- 
titled 'An  act  to  protect  trade  and  commerce  against  un- 
lawful restraints  and  monopolies,'  approved  July  second, 
eighteen  hundred  and  ninety,  'An  act  to  regulate  com- 
merce,' approved  February  fourth,  eighteen  hundred  and 
eighty-seven,  or  any  other  acts  having  a  like  purpose  that 
hereafter  may  be  enacted,  wherein  the  United  States  is 
complainant,  the  Attorney  General  may  file  with  the  clerk 
of  such  court  a  certificate  that,  in  his  opinion,  the  case  is 
of  general  public  importance,  a  copy  of  which  shall  be 
immediately  furnished  by  such  clerk  to  each  of  the  circuit 
judges  of  the  circuit  in  which  the  case  is  pending.  There- 
upon such  case  shall  be  given  precedence  over  others  and 
in  every  way  expedited,  and  be  assigned  for  hearing  at  the 
earliest  practicable  day,  before  not  less  than  three  of  the 
circuit  judges  of  said  court,  if  there  be  three  or  more;  and 
if  there  be  not  more  than  two  circuit  judges,  then  before 


The  Judicial  Code  307 

them  and  such  district  judge  as  they  may  select;  or,  in 
case  the  full  court  shall  not  at  any  time  be  made  up  by 
reason  of  the  necessary  absence  or  disqualification  of  one 
of  more  of  the  said  circuit  judges,  the  Justice  of  the  Su- 
preme Court  assigned  to  that  circuit  or  the  other  circuit 
judge  or  judges  may  designate  a  district  judge  or  judges 
within  the  circuit  who  shall  be  competent  to  sit  in  said 
court  at  the  hearing  of  said  suit.  In  the  event  the  judges 
sitting  in  such  case  shall  be  equally  divided  in  opinion  as 
to  the  decision  or  disposition  of  said  cause,  or  in  the  event 
that  a  majority  of  said  judges  shall  be  unable  to  agree 
upon  the  judgment,  order,  or  decree  finally  disposing  of 
said  case  in  said  court  which  should  be  entered  in  said 
cause,  then  they  shall  immediately  certify  that  fact  to  the 
Chief  Justice  of  the  United  States,  who  shall  at  once 
designate  and  appoint  some  circuit  judge  to  sit  with  said 
judges  and  to  assist  in  determining  said  cause.  Such 
order  of  the  Chief  Justice  shall  be  immediately  transmitted 
to  the  clerk  of  the  circuit  court  in  which  said  cause  is 
pending,  and  shall  be  entered  upon  the  minutes  of  said 
court.  Thereupon  said  cause  shall  at  once  be  set  down  for 
reargument  and  the  parties  thereto  notified  in  writing  by 
the  clerk  of  said  court  of  the  action  of  the  court  and  the 
date  fixed  for  the  reargument  thereof.  The  provisions  of 
this  section  shall  apply  to  all  causes  and  proceedings  in 
all  courts  now  pending,  or  which  may  hereafter  be  brought. 
Approved,  June  25,  1910. 

THE  JUDICIAL  CODE 

AN  ACT  To  codify,  revise,  and  amend  the  laws  relating 
to  the  judiciary. 
(Approved,  March  3,  1911;  in  effect  January  1,  1912.) 
Sec.  289.  The  circuit  courts  of  the  United  States,  upon 


.'308  '  Appendix 

the  taking  effect  of  this  act,  shall  be  and  hereby  are 
abolished.  .  .  . 

Sec.  290.  All  suits  and  proceedings  pending  in  said 
circuit  courts  on  the  day  of  the  taking  effect  of  this  act, 
whether  originally  brought  therein  or  certified  thereto 
from  the  district  courts,  shall  thereupon  and  thereafter 
be  proceeded  with  and  disposed  of  in  the  district  courts 
in  the  same  manner  and  with  the  same  effect  as  if  originally 
begun  therein.  .  .  . 

Sec.  291.  Wherever,  in  any  law  not  eml)raced  within 
this  act,  any  reference  is  made  to,  or  any  power  or  duty  is 
conferred  or  imposed  upon,  the  circuit  courts,  such  ref- 
erence shall,  upon  the  taking  effect  of  this  act,  ])e  deemed 
and  held  to  refer  to,  and  to  confer  such  power  and  impose 
such  duty  upon,  the  district  courts. 

THE  IMMUNITY  ACTS 

(32  Stat.  854,  903) 

AN  ACT  Making  appropriations  for  the  legislative,  ex- 
ecutive, and  judicial  expenses  of  the  Government  for 
the  fiscal  year  ending  June  thirtieth,  nineteen  hundred 
and  four,  and  for  other  purposes. 

That  for  the  enforcement  of  the  provisions  of  the  act 
entitled  "An  act  to  regulate  commerce,"  approved  Feb- 
ruary fourth,  eighteen  hundred  and  eighty-seven,  and  all 
acts  amendatory  thereof  or  supplemental  thereto,  and  of 
the  act  entitled  "An  act  to  protect  trade  and  commerce 
against  unlawful  restraints  and  monopolies,"  approved 
July  second,  eighteen  hundred  and  ninety,  and  all  acts 
amendatory  thereof  or  supplemental  thereto,  and  sections 
seventy-three,  seventy-four,  seventy-five,  and  seventy-six 


The  Immunity  Acts  309 

of  the  act  entitled  "An  act  to  reduce  taxation,  to  provide 
revenue  for  the  Government,  and  other  purposes,"  ap- 
proved August  twenty-seventh,  eighteen  hundred  and 
ninety-four,  the  sum  of  five  hundred  thousand  dollars, 
to  be  immediately  available,  is  hereby  appropriated,  out  of 
any  money  in  the  Treasury  not  heretofore  appropriated, 
to  be  expended  under  the  direction  of  the  Attorney  General 
in  the  employment  of  special  counsel  and  agents  of  the 
Department  of  Justice  to  conduct  proceedings,  suits,  and 
prosecutions  under  said  acts  in  the  courts  of  the  United 
States:  Provided,  That  no  person  shall  be  prosecuted  or 
be  subjected  to  any  penalty  or  forfeiture  for  or  on  account 
of  any  transaction,  matter,  or  thing  concerning  which  he 
may  testify  or  produce  evidence,  documentary  or  other- 
wise, in  any  proceeding,  suit  or  prosecution  under  said 
acts:  Provided  further,  That  no  person  so  testifying  shall 
be  exempt  from  prosecution  or  punishment  for  perjury 
committed  in  so  testifying. 

Approved,  February  25,  1903. 

(34  Stat.  798) 

AN  ACT  Defining  the  right  of  immunity  of  witnesses 
under  the  act  entitled  "An  act  in  relation  to  testimony 
before  the  Interstate  Commerce  Commission,"  and 
so  forth,  approved  February  eleventh,  eighteen  hun- 
dred and  ninety-three,  and  an  act  entitled  "An  act 
to  establish  the  Department  of  Commerce  and  Labor, 
approved  February  fourteenth,  nineteen  hundred  and 
three,  and  an  act  entitled  "An  act  to  further  regulate 
commerce  with  foreign  nations  and  among  the  States," 
approved  February  nineteenth,  nineteen  hundred  and 
three,  and  an  act  entitled  "An  act  making  n])pro- 


310  Appendix 

priations  for  the  legislative,  executive,  and  judicial 
expense  of  the  Government  for  the  fiscal  year  ending 
June  thirtieth,  nineteen  hundred  and  four,  and  for 
other   purposes,"    approved    February   twenty-fifth, 
nineteen  hundred  and  three. 
That  under  the  immunity  provisions  in  the  Act  entitled 
"An  act  in  relation  to  testimony  before  the  Interstate 
Commerce  Commission,"  and  so  forth,   approved  Feb- 
ruary eleventh,   eighteen  hundred  and  ninety-three,   in 
section  six  of  the  act  entitled  ''An  act  to  establish  the  De- 
partment of  Commerce  and  Labor,"  approved  February 
fourteenth,  nineteen  hundred  and  three,  and  in  the  act 
entitled  "An  act  to  further  regulate  commerce  with  foreign 
nations  and  among  the  States,"  approved  February  nine- 
teenth, nineteen  hundred  and  three,  and  in  the  act  entitled 
"An  act  making  appropriations  for  the  legislative,  execu- 
tive, and  judicial  expenses  of  the  Government  for  the 
fiscal  year  ending  June  thirtieth,  nineteen  hundred  and 
four,  and  for  other  purposes,"  approved  February  twenty- 
fifth,  nineteen  hundred  and  three,  immunity  shall  extend 
only  to  a  natural  person  who,  in  obedience  to  a  subpoena, 
gives  testimony  under  oath  or  produces  evidence,  docu- 
mentary or  otherwise,  under  oath. 
Approved,  June  30,  1906. 

THE  CLAYTON  ACT 

[Public — No.  212 — 63d  Congress] 
[H.  R.  15657] 

AN  ACT  To  supplement  existing  laws  against  unlawful 
restraints  anti  monopolies,  and  for  other  purposes. 
Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assembled,  That 


The  Clayton  Act  311 

"antitrust  laws,"  as  used  herein,  includes  the  Act  entitled 
"An  Act  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monopolies,"  approved  July  second, 
eighteen  hundred  and  ninety;  sections  seventy-three  to 
seventy-seven,  inclusive,  of  an  Act  entitled  "An  Act  to 
reduce  taxation,  to  provide  revenue  for  the  Government, 
and  for  other  purposes,"  of  August  twenty-seventh,  eight- 
een hundred  and  ninety-four;  an  Act  entitled  "An  Act  to 
amend  sections  seventy-three  and  seventy-six  of  the  Act 
of  August  twenty-seventh,  eighteen  hundred  and  ninety- 
four,  entitled  'An  Act  to  reduce  taxation,  to  provide 
revenue  for  the  Government,  and  for  other  purposes,'" 
approved  February  twelfth,  nineteen  hundred  and  thir- 
teen; and  also  this  Act. 

"Commerce,"  as  used  herein,  means  trade  or  commerce 
among  the  several  States  and  with  foreign  nations,  or  be- 
tween the  District  of  Columbia  or  any  Territory  of  the 
United  States  and  any  State,  Territory,  or  foreign  nation, 
or  between  any  insular  possessions  or  other  places  under 
the  jurisdiction  of  the  United  States,  or  between  any  such 
possession  or  place  and  any  State  or  Territory  of  the 
United  States  or  the  District  of  Columbia  or  any  foreign 
nation,  or  within  the  District  of  Columl^ia  or  any  Terri- 
tory or  any  insular  possession  or  other  place  under  the 
jurisdiction  of  the  United  States:  Provided,  That  nothing 
in  this  Act  contained  shall  apply  to  the  Philippine  Islands. 

The  word  "person"  or  "persons"  wherever  used  in  this 
Act  shall  be  deemed  to  include  corporations  and  associa- 
tions existing  under  or  authorized  by  the  laws  of  either 
the  United  States,  the  laws  of  any  of  the  Terri- 
tories, the  laws  of  any  State,  or  the  laws  of  any  foreign 
country. 

Sec.  2.  That  it  shall  be  unlawful  for  any  person  en- 
gaged in  commerce,  in  the  course  of  such  commerce,  either 


'M2  Appendix 

directly  ,or  indirectly  to  discriminate  in  price  between  dif- 
ferent purchasers  of  commodities,  which  commodities  are 
sold  for  use,  consumption,  or  resale  within  the  United 
States  or  any  Territory  thereof  or  the  District  of  Columbia 
or  any  insular  possession  or  other  place  under  the  jurisdic- 
tion of  the  United  States,  where  the  effect  of  such  dis- 
crimination may  be  to  substantially  lessen  competition  or 
tend  to  create  a  monopoly  in  any  line  of  commerce:  Pro- 
vided, That  nothing  herein  contained  shall  prevent  dis- 
crimination in  price  between  purchasers  of  commodities 
on  account  of  differences  in  the  grade,  quality,  or  quantity 
of  the  commodity  sold,  or  that  makes  only  due  allowance 
for  difference  in  the  cost  of  selling  or  transportation,  or 
discrimination  in  price  in  the  same  or  different  com- 
munities made  in  good  faith  to  meet  competition:  And 
provided  further,  That  nothing  herein  contained  shall  pre- 
vent persons  engaged  in  selling  goods,  wares,  or  mer- 
chandise in  commerce  from  selecting  their  own  custom- 
ers in  bona  fide  transactions  and  not  in  restraint  of 
trade. 

Sec.  3.  That  it  shall  be  unlawful  for  any  person  en- 
gaged in  commerce,  in  the  course  of  such  commerce,  to 
lease  or  make  a  sale  or  contract  for  sale  of  goods,  wares, 
merchandise,  machinery,  supplies  or  other  commodities, 
whether  patented  or  unpatented,  for  use,  consumption  or 
resale  within  the  United  States  or  any  Territory  thereof 
or  the  District  of  Columbia  or  any  insular  possession  or 
other  place  under  the  jurisdiction  of  the  United  States,  or 
fix  a  price  charged  therefor,  or  discount  from,  or  rebate 
upon,  such  price,  on  the  condition,  agreement  or  under- 
standing that  the  lessee  or  purchaser  thereof  shall  not  use 
or  deal  in  the  goods,  wares,  merchandise,  machinery,  sup- 
plies or  other  commodities  of  a  competitor  or  competitors 
of  the  lessor  or  sell(;r,  where  the  effect  of  such  lease,  sale,  or 


The  Clayton  Act  313 

contract  for  sale  or  such  condition,  agreement  or  under- 
standing may  be  to  sulistantially  lessen  competition  or 
tend  to  create  a  monopoly  in  any  line  of  commerce. 

Sec.  4.  That  any  person  who  shall  be  injured  in  his 
business  or  property  by  reason  of  anything  forbidden  in 
the  antitrust  laws  may  sue  therefor  in  any  district  court 
of  the  United  States  in  the  district  in  which  the  defendant 
resides  or  is  found  or  has  an  agent,  without  respect  to  the 
amount  in  controversy,  and  shall  recover  threefold  the 
damages  by  him  sustained,  and  the  cost  of  suit,  including 
a  reasonable  attorney's  fee. 

Sec.  5.  That  a  final  judgment  or  decree  hereafter  ren- 
dered in  any  criminal  prosecution  or  in  any  suit  or  proceed- 
ing in  equity  brought  by  or  on  behalf  of  the  United  States 
under  the  antitrust  laws  to  the  effect  that  a  defendant  has 
violated  said  laws  shall  be  prima  facie  evidence  against 
such  defendant  in  any  suit  or  proceeding  brought  by  any 
other  party  against  such  defendant  under  said  laws  as  to 
all  matters  respecting  which  said  judgment  or  decree  would 
be  an  estoppel  as  between  the  parties  thereto:  Provided, 
This  section  shall  not  apply  to  consent  judgments  or  de- 
crees entered  before  any  testimony  has  been  taken:  Pro- 
vided further,  This  section  shall  not  apply  to  consent 
judgments  or  decrees  rendered  in  criminal  proceedings  or 
suits  in  equity,  now  pending,  in  which  the  taking  of  testi- 
mony has  been  commenced  but  has  not  been  concluded, 
provided  such  judgments  or  decrees  are  rendered  before 
any  further  testimony  is  taken. 

Whenever  any  suit  or  proceeding  in  equity  or  criminal 
prosecution  is  instituted  by  the  United  States  to  prevent, 
restrain  or  punish  violations  of  any  of  the  antitrust  laws, 
the  running  of  the  statute  of  limitations  in  respect  of  each 
and  every  private  right  of  action  arising  under  said  laws 
and  based  in  whole  or  in  part  on  any  matter  complained  of 


314  Appendix 

in  said  suit  or  proceeding  shall  be  suspended  during  the 
pendency  thereof. 

Sec.  6.  That  the  labor  of  a  human  ])eing  is  not  a  com- 
modity or  article  of  commerce.  Nothing  contained  in  the 
antitrust  laws  shall  be  construed  to  forbid  the  existence 
and  operation  of  labor,  agricultural,  or  horticultiu-al  or- 
ganizations, instituted  for  the  purposes  of  mutual  help, 
and  not  having  capital  stock  or  conducted  for  profit,  or 
to  forbid  or  restrain  individual  members  of  such  organiza- 
tions from  lawfully  carrying  out  the  legitimate  objects 
thereof;  nor  shall  such  organizations,  or  the  members 
thereof,  be  held  or  construed  to  be  illegal  combinations  or 
conspiracies  in  restraint  of  trade,  under  the  antitrust  laws. 

Sec.  7.  That  no  corporation  engaged  in  commerce  shall 
acquire,  directly  or  indirectly,  the  whole  or  any  part  of 
the  stock  or  other  share  capital  of  another  corporation 
engaged  also  in  commerce,  where  the  effect  of  such  ac- 
quisition may  be  to  substantially  lessen  competition  be- 
tween the  corporation  whose  stock  is  so  acciuired  and  the 
corporation  making  the  acquisition,  or  to  restrain  such 
commerce  in  any  section  or  community,  or  tend  to  create 
a  monopoly  of  any  line  of  commerce. 

No  corporation  shall  acquire,  directly  or  indirectly,  the 
whole  or  any  part  of  the  stock  or  other  share  capital  of  two 
or  more  corporations  engaged  in  commerce  where  the 
effect  of  such  acquisition,  or  the  use  of  such  stock  by  the 
voting  or  granting  of  proxies  or  otherwise,  may  be  to  sub- 
stantially lessen  competition  between  such  corporations, 
or  any  of  them,  whose  stock  or  other  share  capital  is  so  ac- 
quired, or  to  restrain  such  commerce  in  any  section  or 
community,  or  tend  to  create  a  monopoly  of  any  line  of 
commerce. 

This  section  shall  not  apply  to  corporations  purchasing 
such  stock  solely  for  investment  and  not  using  the  same 


The  Clayton  Act  315 

by  voting  or  otherwise  to  bring  about,  or  in  attempting 
to  bring  alwut,  tlie  substantial  lessening  of  competition. 
Nor  shall  an}1;hing  contained  in  this  section  prevent  a 
corporation  engaged  in  commerce  from  causing  the  forma- 
tion of  subsidiary  corporations  for  the  actual  carrying  on 
of  their  inmiediate  lawful  business,  or  the  natural  and 
legitimate  branches  or  extensions  thereof,  or  from  owning 
and  holding  all  or  a  part  of  the  stock  of  such  subsidiary 
corporations,  when  the  effect  of  such  formation  is  not  to 
substantially  lessen  competition. 

Nor  shall  anything  herein  contained  be  construed  to 
prohibit  any  common  carrier  subject  to  the  laws  to  regu- 
late commerce  from  aiding  in  the  construction  of  branches 
or  short  lines  so  located  as  to  become  feeders  to  the  main 
line  of  the  company  so  aiding  in  such  construction  or  from 
acquiring  or  owning  all  or  any  part  of  the  stock  of  such 
branch  lines,  nor  to  prevent  any  such  common  carrier 
from  acquiring  and  owTiing  all  or  any  part  of  the  stock  of 
a  branch  or  short  line  constructed  by  an  independent  com- 
pany where  there  is  no  substantial  competition  between  the 
company  owning  the  branch  line  so  constructed  and  the 
company  owning  the  main  line  acquiring  the  property  or 
an  interest  therein,  nor  to  prevent  such  common  carrier 
from  extending  any  of  its  lines  through  the  medium  of  the 
acquisition  of  stock  or  otherwise  of  any  other  such  com- 
mon carrier  where  there  is  no  substantial  competition  be- 
tween the  company  extending  its  lines  and  the  company 
whose  stock,  property,  or  an  interest  therein  is  so  ac- 
quired. 

Nothing  contained  in  this  section  shall  be  held  to  affect 
or  impair  any  right  heretofore  legally  acquired:  Provided, 
That  nothing  in  this  section  shall  be  held  or  construed  to 
authorize  or  make  lawful  anything  heretofore  prohibited 
or  made  illegal  by  the  antitrust  laws,  nor  to  exempt  any 


31G  Appendix 

person  from  the  penal  provisions  thereof  or  the  civil 
remedies  therein  provided. 

Sec.  8.  That  from  and  after  two  j'ears  from  the  date 
of  the  approval  of  this  Act  no  person  shall  at  the  same 
time  be  a  director  or  other  officer  or  employee  of  more 
than  one  bank,  banking  association  or  trust  company, 
organized  or  operating  under  the  laws  of  the  United  States, 
either  of  which  has  deposits,  capital,  surplus,  and  un- 
divided profits  aggregating  more  than  $5,000,000;  and  no 
private  banker  or  person  who  is  a  director  in  any  bank  or 
trust  company,  organized  and  operating  under  the  laws  of 
a  State,  having  deposits,  capital,  surplus,  and  undivided 
profits  aggregating  more  than  $5,000,000,  shall  be  eligible 
to  be  a  director  in  any  bank  or  banking  association  or- 
ganized or  operating  under  the  laws  of  the  United  States. 
The  eligibility  of  a  director,  officer,  or  employee  under  the 
foregoing  provisions  shall  be  determined  by  the  average 
amount  of  deposits,  capital,  surplus,  and  undivided  profits 
as  sho\\Ti  in  the  official  statements  of  such  bank,  banking 
association,  or  trust  company  filed  as  provided  by  law 
during  the  fiscal  year  next  preceding  the  date  set  for  the 
annual  election  of  directors,  and  when  a  director,  officer, 
or  employee  has  been  elected  or  selected  in  accordance 
with  the  provisions  of  this  Act  it  shall  be  lawful  for  him  to 
continue  as  such  for  one  year  thereafter  under  said  election 
or  employment. 

No  bank,  banking  association  or  trust  company,  or- 
ganized or  operating  under  the  laws  of  the  United  States, 
in  any  city  or  incorporated  town  or  village  of  more  than 
two  hundred  thousand  inhabitants,  as  shown  by  the  last 
preceding  decennial  census  of  the  United  States,  shall  have 
as  a  director  or  other  officer  or  employee  any  private 
banker  or  any  director  or  other  officer  or  employee  of  any 
other  bank,  banking  association  or  trust  company  located 


The  Clayton  Act  317 

in  the  saiiic  place:  Provided,  That  nothing  in  this  section 
shall  apply  to  mutual  savings  banks  not  having  a  capital 
stock  represented  by  shares:  Provided  further,  That  a 
director  or  other  officer  or  employee  of  such  bank,  banking 
association,  or  trust  company  may  be  a  director  or  other 
officer  or  employee  of  not  more  than  one  other  l^ank  or 
trust  company  organized  under  the  laws  of  the  United 
States  or  any  State  where  the  entire  capital  stock  of  one 
is  owned  by  stockholders  in  the  other:  ^nd  provided  further, 
That  nothing  contained  in  this  section  shall  forbid  a  di- 
rector of  class  A  of  a  Federal  reserve  bank,  as  defined  in 
the  Federal  Reserve  Act  from  being  an  officer  or  director 
or  both  an  officer  and  director  in  one  member  bank. 

That  from  and  after  two  years  from  the  date  of  the  ap- 
proval of  this  Act  no  person  at  the  same  time  shall  be  a 
director  in  any  two  or  more  corporations,  any  one  of  which 
has  capital,  surplus,  and  undivided  profits  aggregating 
more  than  $1,000,000,  engaged  in  whole  or  in  part  in  com- 
merce, other  than  banks,  banking  associations,  trust  com- 
panies and  common  carriers  subject  to  the  Act  to  regulate 
commerce,  approved  February  fourth,  eighteen  hundred 
and  eighty-seven,  if  such  corporations  are  or  shall  have 
been  theretofore,  by  virtue  of  their  business  and  location 
of  operation,  competitors,  so  that  the  elimination  of  com- 
petition b}'^  agreement  between  them  would  constitute  a 
violation  of  any  of  the  provisions  of  any  of  the  antitrust 
laws.  The  eligibility  of  a  director  under  the  foregoing 
provision  shall  be  determined  by  the  aggregate  amount 
of  the  capital,  surplus,  and  undivided  profits,  exclusive  of 
dividends  declared  but  not  paid  to  stockholders,  at  the 
end  of  the  fiscal  year  of  said  corporation  next  preceding  the 
election  of  directors,  and  when  a  director  has  been  elected 
in  accordance  with  the  provisions  of  this  Act  it  shall  be 
lawful  for  him  to  continue  as  such  for  one  vear  thereafter. 


318  Appendix 

When  any  person  elected  or  chosen  as  a  director  or 
officer  or  selected  as  an  employee  of  any  bank  or  other  cor- 
poration subject  to  the  provisions  of  this  Act  is  eligible  at 
the  time  of  his  election  or  selection  to  act  for  such  bank  or 
other  corporation  in  such  capacity  his  eligibility  to  act  in 
such  capacity  shall  not  be  affected  and  he  shall  not  become 
or  be  deemed  amenal^le  to  any  of  the  provisions  hereof  by 
reason  of  any  change  in  the  affairs  of  such  bank  or  other 
corporation  from  whatsoever  cause,  whether  specifically 
excepted  by  any  of  the  provisions  hereof  or  not,  until  the 
expiration  of  one  year  from  the  date  of  his  election  or  em- 
plojTnent. 

Sec.  9.  Every  president,  director,  officer  or  manager  of 
any  firm,  association  or  corporation  engaged  in  commerce 
as  a  common  carrier,  who  embezzles,  steals,  abstracts  or 
willfully  misapplies,  or  willfully  permits  to  be  misapplied, 
any  of  the  moneys,  funds,  credits,  securities,  proj^erty  or 
assets  of  such  firm,  association  or  corporation,  arising  or 
accruing  from,  or  used  in,  such  commerce,  in  whole  or  in 
part,  or  willfully  or  knowingly  converts  the  same  to  his 
own  use  or  to  the  use  of  another,  shall  be  deemed  guilty 
of  a  felony  and  upon  conviction  shall  be  fined  not  less  than 
$500  or  confined  in  the  penitentiary  not  less  than  one  year 
nor  more  than  ten  years,  or  both,  in  the  discretion  of  the 
court. 

Prosecutions  hereunder  may  be  in  the  district  court  of 
the  United  States  for  the  district  wherein  the  offense  may 
have  been  committed. 

That  nothing  in  this  section  shall  be  held  to  take  away 
or  impair  the  jurisdiction  of  the  courts  of  the  several  States 
under  the  laws  thereof;  and  a  judgment  of  conviction  or 
acquittal  on  the  merits  under  the  laws  of  any  State  shall  be 
a  bar  to  any  prosecution  hereunder  for  the  same  act  or 
acts. 


The  Clayton  Act  319 

Sec.  10.  That  after  two  years  from  the  approval  of  this 
Act  no  common  carrier  engaged  in  commerce  shall  have 
any  dealings  in  securities,  supplies  or  other  articles  of  com- 
merce, or  shall  make  or  have  any  contracts  for  construc- 
tion or  maintenance  of  any  kind,  to  the  amount  of  more 
than  $50,000,  in  the  aggregate,  in  any  one  year,  with  an- 
other corporation,  firm,  partnership  or  association  when 
the  said  common  carrier  shall  have  upon  its  board  of  di- 
rectors or  as  its  president,  manager  or  as  its  purchasing 
or  selling  officer,  or  agent  in  the  particular  transaction,  any 
person  who  is  at  the  same  time  a  director,  manager,  or 
purchasing  or  selling  officer  of,  or  who  has  any  substantial 
interest  in,  such  other  corporation,  firm,  partnership  or 
association,  unless  and  except  such  purchases  shall  be 
made  from,  or  such  dealings  shall  be  with,  the  bidder 
whose  bid  is  the  most  favorable  to  such  common  carrier, 
to  be  ascertained  by  competitive  bidding  under  regula- 
tions to  be  prescribed  by  rule  or  otherwise  by  the  Inter- 
state Commerce  Commission.  No  bid  shall  be  received 
unless  the  name  and  address  of  the  bidder  or  the  names 
and  addresses  of  the  officers,  directors  and  general  man- 
agers thereof,  if  the  bidder  be  a  corporation,  or  of  the 
members,  if  it  be  a  partnership  or  firm,  be  given  with  the 
bid. 

Any  person  who  shall,  directh^  or  indirectly,  do  or  at- 
tempt to  do  anything  to  prevent  anyone  from  bidding  or 
shall  do  any  act  to  prevent  free  and  fair  competition  among 
the  bidders  or  those  desiring  to  bid  shall  be  punished  as 
prescribed  in  this  section  in  the  case  of  an  officer  or  director. 

Every  such  common  carrier  having  any  such  transac- 
tions or  making  any  such  purchases  shall  within  thirty 
days  after  making  the  same  file  with  the  Interstate  Com- 
merce Commission  a  full  and  detailed  statement  of  the 
transaction  showing  the  manner  of  the  competitive  bid- 


S20  Appendix 

ding,  who  were  the  bidders,  and  the  names  and  addresses 
of  the  directors  and  officers  of  the  corporations  and  the 
members  of  the  firm  or  partnership  bid(Hng ;  and  whenever 
the  said  commission  shall,  after  investigation  or  hearing, 
have  reason  to  believe  that  the  law  has  been  violated  in 
and  about  the  said  purchases  or  transactions  it  shall  trans- 
mit all  papers  and  documents  and  its  own  ^dews  or  findings 
regarding  the  transaction  to  the  Attorney  General. 

If  any  common  carrier  shall  violate  this  section  it  shall 
be  fined  not  exceeding  $25,000;  and  every  such  director, 
agent,  manager  or  officer  thereof  who  shall  have  knowingly 
voted  for  or  directed  the  act  constituting  such  violation 
or  who  shall  have  aided  or  abetted  in  such  violation  shall 
be  deemed  guilty  of  a  misdemeanor  and  shall  be  fined  not 
exceeding  $5,000,  or  confined  in  jail  not  exceeding  one 
year,  or  both,  in  the  discretion  of  the  court. 

Sec.  11.  That  authority  to  enforce  compliance  with 
sections  two,  three,  seven  and  eight  of  this  Act  by  the 
persons  respectively  subject  thereto  is  hereby  vested:  in 
the  Interstate  Commerce  Commission  where  applicable 
to  common  carriers,  in  the  Federal  Reserve  Board  where 
applicable  to  banks,  banking  associations  and  trust  com- 
panies, and  in  the  Federal  Trade  Commission  where  ap- 
plicable to  all  other  character  of  commerce,  to  be  exercised 
as  follows: 

Whenever  the  commission  or  board  vested  with  juris- 
diction thereof  shall  have  reason  to  believe  that  any  person 
is  violating  or  has  violated  any  of  the  provisions  of  sec- 
tions two,  three,  seven  and  eight  of  this  Act,  it  shall  issue 
and  serve  upon  such  person  a  complaint  stating  its  charges 
in  that  respect,  and  containing  a  notice  of  a  hearing  upon 
a  day  and  at  a  place  therein  fixed  at  least  thirty  days  after 
the  service  of  said  complaint.  The  person  so  complained 
of  shall  have  the  right  to  appear  at  the  place  and  time  so 


The  Clayton  Act  321 

fixed  and  show  cause  why  an  onUu-  should  not  be  entered 
by  the  commission  or  board  nMjuirinp;  such  person  to  cease 
and  desist  from  the  violation  of  the  law  so  charged  in 
said  complaint.  Any  person  may  make  application,  and 
upon  good  cause  shown  may  be  allowed  by  the  commission 
or  board,  to  intervene  and  appear  in  said  proceeding  by 
counsel  or  in  person.  The  testimony  in  any  such  proceed- 
ing shall  be  reduced  to  writing  and  filed  in  the  office  of 
the  commission  or  board.  If  upon  such  hearing  the  com- 
mission or  board,  as  the  case  may  be,  shall  be  of  the  opin- 
ion that  any  of  the  provisions  of  said  sections  have  been 
or  are  being  violated,  it  shall  make  a  report  in  writing  in 
which  it  shall  state  its  findings  as  to  the  facts,  and  shall 
issue  and  cause  to  be  served  on  such  person  an  order  re- 
quiring such  person  to  cease  and  desist  from  such  viola- 
tions, and  divest  itself  of  the  stock  held  or  rid  itself  of  the 
directors  chosen  contrary  to  the  provisions  of  sections 
seven  and  eight  of  this  Act,  if  any  there  be,  in  the  manner 
and  within  the  time  fixed  by  said  order.  Until  a  transcript 
of  the  record  in  such  hearing  shall  have  been  filed  in  a 
circuit  court  of  appeals  of  the  United  States,  as  hereinafter 
provided,  the  commission  or  board  may  at  any  time,  upon 
such  notice  and  in  such  manner  as  it  shall  deem  proper, 
modify  or  set  aside,  in  whole  or  in  part,  any  report  or  any 
order  made  or  issued  by  it  under  this  section. 

If  such  person  fails  or  neglects  to  obey  such  order  of  the 
commission  or  board  while  the  same  is  in  effect,  the  com- 
mission or  board  may  apply  to  the  circuit  court  of  appeals 
of  the  United  States,  within  any  circuit  where  the  violation 
complained  of  was  or  is  being  committed  or  where  such 
person  resides  or  carries  on  business,  for  the  enforcement 
of  its  order,  and  shall  certify  and  file  with  its  application  a 
transcript  of  the  entire  record  in  the  proceeding,  including 
all  the  testimony  taken  and  the  report  and  order  of  the 


322  Appendix 

commission  or  board.  Upon  such  filing  of  the  application 
and  transcript  the  court  shall  cause  notice  thereof  to  be 
served  upon  such  person  and  thereupon  shall  have  juris- 
diction of  the  proceeding  and  of  the  question  determined 
therein,  and  shall  have  power  to  make  and  enter  upon  the 
pleadings,  testimony,  and  proceedings  set  forth  in  such 
transcript  a  decree  affirming,  modifying,  or  setting  aside 
the  order  of  the  commission  or  board.  The  findings  of  the 
commission  or  board  as  to  the  facts,  if  supported  by  testi- 
mony, shall  be  conclusive.  If  either  party  shall  apply  to 
the  court  for  leave  to  adduce  additional  evidence,  and 
shall  show  to  the  satisfaction  of  the  court  that  such  addi- 
tional evidence  is  material  and  that  there  were  reasonable 
grounds  for  the  failure  to  adduce  such  evidence  in  the 
proceeding  before  the  commission  or  board,  the  court 
may  order  such  additional  evidence  to  be  taken  before 
the  commission  or  board  and  to  be  adduced  upon  the 
hearing  in  such  manner  and  upon  such  terms  and  condi- 
tions as  to  the  court  may  seem  proper.  The  commission 
or  board  may  modify  its  findings  as  to  the  facts,  or  make 
new  findings,  by  reason  of  the  additional  evidence  so  taken, 
and  it  shall  file  such  modified  or  new  findings,  which,  if 
supported  by  testimony,  shall  be  conclusive,  and  its  recom- 
mendation, if  any,  for  the  modification  or  setting  aside  of 
its  original  order,  with  the  return  of  such  additional  evi- 
dence. The  judgment  aufl  decree  of  the  covn't  shall  be 
final,  except  that  the  same  shall  be  subject  to  review  by  the 
Supreme  Court  upon  certiorari  as  provided  in  section  two 
hundred  and  forty  of  the  Judicial  Code. 

An}^  party  required  by  such  order  of  the  commission  or 
board  to  cease  and  desist  from  a  violation  charged  may 
obtain  a  review  of  such  order  in  said  circuit  court  of  appeals 
by  filing  in  the  court  a  written  petition  praying  that  the 
order  of  the  commission  or  board  be  set  aside.     A  copy  of 


'I'hk  Clayton  Act  323 

such  petition  shall  he  forthwith  served  uj^oii  the  commis- 
sion or  board,  and  thereupon  the  commission  or  board 
forthwith  shall  certify  and  file  in  the  court  a  transcript  of 
the  record  as  hereinbefore  provided.  Upon  the  filing  of 
the  transcript  the  court  shall  have  the  same  jurisdiction  to 
affirm,  set  aside,  or  modify  the  order  of  the  commission 
or  board  as  in  the  case  of  an  application  by  the  com- 
mission or  board  for  the  enforcement  of  its  order,  and 
the  findings  of  the  commission  or  board  as  to  the  facts,  if 
supported  by  testimony,  shall  in  like  manner  be  con- 
clusive. 

The  jurisdiction  of  the  circuit  court  of  appeals  of  the 
United  States  to  enforce,  set  aside,  or  modify  orders  of  the 
commission  or  board  shall  be  exclusive. 

Such  proceedings  in  the  circuit  court  of  appeals  shall 
be  given  precedence  over  other  cases  pending  therein,  and 
shall  be  in  every  way  expedited.  No  order  of  the  commis- 
sion or  board  or  the  judgment  of  the  court  to  enforce  the 
same  shall  in  any  wise  relieve  or  absolve  any  person  from 
any  liability  under  the  anti-trust  Acts. 

Complaints,  orders,  and  other  processes  of  the  commis- 
sion or  board  under  this  section  may  be  served  by  anyone 
duly  authorized  by  the  commission  or  board,  either  (a)  by 
delivering  a  copy  thereof  to  the  person  to  be  served,  or  to 
a  member  of  the  partnership  to  be  served,  or  to  the  presi- 
dent, secretary,  or  other  executive  officer  or  a  director  of 
the  corporation  to  be  served;  or  (b)  by  leaving  a  copy 
thereof  at  the  principal  office  or  place  of  business  of  such 
person;  or  (c)  by  registering  and  mailing  a  copy  thereof 
addressed  to  such  person  at  his  principal  office  or  place  of 
business.  The  verified  return  by  the  person  so  serving 
said  complaint,  order,  or  other  process  setting  forth  the 
manner  of  said  service  shall  be  proof  of  the  same,  and  the 
return  post-office  receipt  for  said  complaint,  order,  or  other 


324  Appendix 

process  registered  and  mailed  as  aforesaid  sliall  be  proof 
of  the  service  of  the  same. 

Sec.  12.  That  any  suit,  action,  or  proceeding  under  the 
antitrust  laws  against  a  corporation  may  be  brought  not 
only  in  the  judicial  district  whereof  it  is  an  inhabitant,  but 
also  in  any  district  wherein  it  may  be  found  or  transacts 
business;  and  all  process  in  such  cases  may  be  served  in 
the  district  of  which  it  is  an  inhabitant,  or  wherever  it  may 
be  found. 

Sec.  13.  That  in  any  suit,  action,  or  proceeding  brought 
by  or  on  behalf  of  the  United  States  subpoenas  for  witnesses 
who  are  required  to  attend  a  court  of  the  United  States 
in  any  judicial  district  in  any  case,  civil  or  criminal,  arising 
under  the  anti-trust  laws  may  run  into  any  other  district : 
Provided,  That  in  civil  cases  no  writ  of  subpoena  shall  issue 
for  witnesses  living  out  of  the  district  in  which  the  court 
is  held  at  a  greater  distance  than  one  hundred  miles  from 
the  place  of  holding  the  same  without  the  permission  of 
the  trial  court  being  first  had  upon  proper  application  and 
cause  shown. 

Sec.  14.  That  whenever  a  corporation  shall  violate  any 
of  the  penal  provisions  of  the  antitrust  laws,  such  violation 
shall  be  deemed  to  be  also  that  of  the  individual  directors, 
officers,  or  agents  of  such  corporation  who  shall  have  au- 
thorized, ordered,  or  done  any  of  the  acts  constituting  in 
whole  or  in  part  such  violation,  and  such  violation  shall 
be  deemed  a  misdemeanor,  and  upon  conviction  therefor 
of  any  such  director,  officer,  or  agent  he  shall  be  punished 
by  a  fine  of  not  exceeding  $5,000  or  by  imprisonment  for 
not  exceeding  one  year,  or  by  both,  in  the  discretion  of  the 
court. 

Sec.  15.  That  the  several  district  courts  of  the  United 
States  are  hereby  invested  Avith  jurisdiction  to  prevent 
and  restrain  violations  of  this  Act,  and  it  shall  be  the 


The  Clayton  Act  325 

duty  of  the  several  district  attorneys  of  the  United  States, 
in  their  respective  districts,  under  the  cUrection  of  the 
Attorney  General,  to  institute  proceedings  in  equity  to 
prevent  and  restrain  such  violations.  Such  proceedings 
may  be  by  way  of  petition  setting  forth  the  case  and  pray- 
ing that  such  violation  shall  be  enjoined  or  otherwise  pro- 
hibited. When  the  parties  complained  of  shall  have  been 
duly  notified  of  such  petition,  the  court  shall  proceed,  as 
soon  as  may  be,  to  the  hearing  and  determination  of  the 
ease;  and  pending  such  petition,  and  before  final  decree, 
the  court  may  at  any  time  make  such  temporary  restrain- 
ing order  or  prohibition  as  shall  be  deemed  just  in  the 
premises.  Whenever  it  shall  appear  to  the  court  before 
which  any  such  proceeding  maj'^  be  pending  that  the  ends 
of  justice  require  that  other  parties  should  be  brought 
before  the  court,  the  court  may  cause  them  to  be  sum- 
moned whether  they  reside  in  the  district  in  which  the 
court  is  held  or  not,  and  subpoenas  to  that  end  may  be 
served  in  any  district  by  the  marshal  thereof. 

Sec.  16.  That  any  person,  firm,  corporation,  or  associa- 
tion shall  be  entitled  to  sue  for  and  have  injunctive  relief, 
in  any  court  of  the  United  States  having  jurisdiction  over 
the  parties,  against  threatened  loss  or  damage  by  a  viola- 
tion of  the  anti-trust  laws,  including  sections  two,  three, 
seven  and  eight  of  this  Act,  when  and  under  the  same 
conditions  and  principles  as  injunctive  relief  against  threat- 
ened conduct  that  will  cause  loss  or  damage  is  granted  by 
courts  of  equity,  under  the  rules  governing  such  proceed- 
ings, and  upon  the  execution  of  proper  bond  against  dam- 
ages for  an  injunction  improvidently  granted  and  a  show- 
ing that  the  danger  of  irreparable  loss  or  damage  is 
immediate,  a  preliminary  injunction  may  issue:  Provided, 
That  nothing  herein  contained  shall  be  construed  to  en- 
title any  person,  firm,  corporation,  or  association,  except 


32G  Appendix 

the  United  States,  to  l)ring  suit  in  equity  for  injunctive 
relief  against  any  common  carrier  subject  to  the  provi- 
sions of  the  Act  to  regulate  commerce,  approved  February 
fourth,  eighteen  hundred  and  eighty-seven,  in  respect  of 
any  matter  subject  to  the  regulation,  supervision,  or 
other  jurisdiction  of  the  Interstate  Commerce  Commis- 
sion. 

Sec.  17.  That  no  preliminary  injunction  shall  be  issued 
without  notice  to  the  opposite  party. 

No  temporary  restraining  order  shall  be  granted  with- 
out notice  to  the  opposite  party  unless  it  shall  clearly  ap- 
pear from  specific  facts  shown  ])y  affidavit  or  })y  the  veri- 
fied bill  that  immediate  and  irreparable  injury,  loss,  or 
damage  will  result  to  the  applicant  before  notice  can  be 
served  and  a  hearing  had  thereon.  Every  such  temporary 
restraining  order  shall  he  indorsed  with  the  date  and  hour 
of  issuance,  shall  be  forthwith  filed  in  the  clerk's  office  and 
entered  of  record,  shall  define  the  injury  and  state  why 
it  is  irreparable  and  why  the  order  was  granted  without 
notice,  and  shall  by  its  terms  expire  within  such  time  after 
entry,  not  to  exceed  ten  days,  as  the  court  or  judge  may 
fix,  unless  within  the  time  so  fixed  the  order  is  extended 
for  a  like  period  for  good  cause  shown,  and  the  reasons  for 
such  extension  shall  be  entered  of  record.  In  case  a  tem- 
porary restraining  ortler  shall  be  grantetl  without  notice 
in  the  contingency  specified,  the  matter  of  the  issuance  of 
a  preliminary  injunction  shall  be  set  down  for  a  hearing  at 
the  earliest  pos8il)lo  time  and  shall  take  precedence  of  all 
matters  except  older  matters  of  the  same  character;  and 
when  the  same  comes  uj)  for  hearing  the  party  ol)taining 
the  temporary  restraining  order  shall  jjrocecnl  with  the  ap- 
plication for  a  preliminary  injunction,  and  if  he  does  not 
do  so  the  court  shall  dissolve  the  temporary  restraining 
order.    Upon  two  tlays'  notice  to  the  i)arty  obtaining  such 


The  Clayton  Act  327 

temporarj^  restraining  order  the  op])osite  party  may  ap- 
pear and  move  the  dissolution  or  modification  of  the  order, 
and  in  that  event  the  court  or  judge  shall  proceed  to  hear 
and  determine  the  motion  as  expeditiously  as  the  ends  of 
justice  may  require. 

Section  two  hundred  and  sixty-three  of  an  Act  entitled 
"An  Act  to  codify,  revise,  and  amend  the  laws  relating  to 
the  judiciary,"  approved  March  third,  nineteen  hundred 
and  eleven,  is  hereby  repealed. 

Nothing  in  this  section  contained  shall  be  deemed  to 
alter,  repeal,  or  amend  section  two  hundred  and  sixty-six 
of  an  Act  entitled  "An  Act  to  codify,  revise,  and  amend 
the  laws  relating  to  the  judiciary,"  approved  March  third, 
nineteen  hundred  and  eleven. 

Sec.  18.  That,  except  as  otherwise  provided  in  section  16 
of  this  Act,  no  restraining  order  or  interlocutory  order  of 
injunction  shall  issue,  except  upon  the  giving  of  security 
by  the  applicant  in  such  sum  as  the  court  or  judge  may 
deem  proper,  conditioned  upon  the  payment  of  such  costs 
and  damages  as  may  be  incurred  or  sufferetl  by  any  party 
who  may  be  found  to  have  been  wrongfully  enjoined  or 
restrained  thereby. 

Sec.  19.  That  every  order  of  injunction  or  restraining 
order  shall  set  forth  the  reasons  for  the  issuance  of  the 
same,  shall  be  specific  in  terms,  and  shall  describe  in  rea- 
sonable detail,  and  not  by  reference  to  the  bill  of  complaint 
or  other  document,  the  act  or  acts  sought  to  be  restrained, 
and  shall  be  binding  only  upon  the  parties  to  the  suit,  their 
officers,  agents,  servants,  employees,  and  attorneys,  or 
those  in  active  concert  or  participating  with  them,  and 
who  shall,  by  personal  service  or  otherwise,  have  received 
actual  notice  of  the  same. 

Sec.  20.  That  no  restraining  order  or  injunction  shall 
be  granted  by  any  court  of  the  United  States,  or  a  judge 


328  Appendix 

or  the  judges  thereof,  in  any  case  between  an  employer 
and  employees,  or  between  employers  and  employees,  or 
between  employees,  or  between  persons  employed  and 
persons  seeking  employment,  involving,  or  growing  out 
of,  a  dispute  concerning  terms  or  conditions  of  employ- 
ment, unless  necessary  to  prevent  irreparable  injury  to 
property,  or  to  a  property  right,  of  the  party  making  the 
application,  for  which  injury  there  is  no  adequate  remedy 
at  law,  and  such  property  or  property  right  must  be  de- 
scribed with  particularity  in  the  application,  which  must 
l)e  in  writing  and  sworn  to  by  the  applicant  or  by  his  agent 
or  attorney.  ' 

And  no  such  restraining  order  or  injunction  shall  pro- 
hibit any  person  or  persons,  whether  singly  or  in  concert, 
from  terminating  any  relation  of  employment,  or  from 
ceasing  to  perform  any  work  or  labor,  or  from  recommend- 
ing, advising,  or  persuading  others  by  peaceful  means  so 
to  do;  or  from  attending  at  any  place  where  any  such 
person  or  persons  may  lawfully  be,  for  the  purpose  of  peace- 
fully obtaining  or  communicating  information,  or  from 
peacefully  persuading  any  person  to  work  or  to  abstain 
from  working;  or  from  ceasing  to  patronize  or  to  employ 
any  party  to  such  dispute,  or  from  recommending,  advis- 
ing, or  persuading  others  })y  peaceful  and  lawful  means 
so  to  do;  or  from  paying  or  giving  to,  or  witliholding  from, 
any  person  engaged  in  such  dispute,  any  strike  benefits  or 
other  moneys  or  things  of  value;  or  from  peaceably  as- 
sembling in  a  lawful  manner,  and  for  lawful  purposes;  or 
from  doing  any  act  or  thing  which  might  lawfully  be  done 
in  the  absence  of  such  dispute  by  any  party  thereto;  nor 
shall  any  of  the  acts  specified  in  this  paragraph  be  consid- 
ered or  held  to  be  violations  of  any  law  of  the  United 
States. 

Sec.  21.  That  any  person  who  shall  willfully,  disobey 


The  Clayton  Act         «  329 

any  lawful  writ,  process,  order,  rule,  decree,  or  command 
of  any  district  court  of  the  United  States  or  any  court  of 
the  District  of  Columbia  by  doing  any  act  or  thing  therein, 
or  thereby  forbidden  to  be  done  by  him,  if  the  act  or  thing 
so  done  by  him  be  of  such  character  as  to  constitute  also  a 
criminal  offense  under  any  statute  of  the  United  States,  or 
under  the  laws  of  any  State  in  which  the  act  was  com- 
mitted, shall  be  proceeded  against  for  his  said  contempt  as 
hereinafter  provided. 

Sec,  22.  That  whenever  it  shall  be  made  to  appear  to 
any  district  court  or  judge  thereof,  or  to  any  judge  therein 
sitting,  by  the  return  of  a  proper  officer  on  lawful  process, 
or  upon  the  affidavit  of  some  credil)le  person,  or  by  in- 
formation filed  by  any  district  attorney,  that  there  is  rea- 
sonable ground  to  believe  that  any  person  has  been  guilty 
of  such  contempt,  the  court  or  judge  thereof,  or  any  judge 
therein  sitting,  may  issue  a  rule  requiring  the  said  person 
so.  charged  to  show  cause  upon  a  day  certain  why  he  should 
not  be  punished  therefor,  which  rule,  together  with  a  copy 
of  the  affidavit  or  information,  shall  be  served  upon  the 
person  charged,  with  sufficient  promptness  to  enable  him 
to  prepare  for  and  make  return  to  the  order  at  the  time 
fixed  therein.  If  upon  or  by  such  return,  in  the  judgment 
of  the  court,  the  alleged  contempt  be  not  sufficiently 
purged,  a  trial  shall  be  directed  at  a  time  and  place  fixed 
by  the  court:  Provided,  however,  That  if  the  accused,  being 
a  natural  person,  fail  or  refuse  to  make  return  to  the  rule 
to  show  cause,  an  attachment  may  issue  against  his  person 
to  compel  an  answer,  and  in  case  of  his  continued  failure 
or  refusal,  or  if  for  any  reason  it  be  impracticable  to  dis- 
pose of  the  matter  on  the  return  day,  he  may  be  required 
to  give  reasonable  bail  for  his  attendance  at  the  trial  and 
his  submission  to  the  final  judgment  of  the  court.  Where 
the  accused  is  a  body  corporate,  an  attachment  for  the 


330  Appendix 

sequestration  of  its  property  may  be  issued  upon  like  re- 
fusal or  failure  to  answer. 

In  all  cases  within  the  purview  of  this  Act  such  trial 
may  be  by  the  court,  or,  upon  demand  of  the  accused,  by 
a  jury;  in  which  latter  event  the  court  may  impanel  a  jurj'^ 
from  the  jurors  then  in  attendance,  or  the  court  or  the 
judge  thereof  in  chambers  may  cause  a  sufficient  number 
of  jurors  to  be  selected  and  summoned,  as  provided  by 
law,  to  attend  at  the  time  and  place  of  trial,  at  which 
time  a  jury  shall  be  selected  and  impaneled  as  upon  a  trial 
for  misdemeanor;  and  such  trial  shall  conform,  as  near  as 
may  be,  to  the  practice  in  criminal  cases  prosecuted  by  in- 
dictment or  upon  information. 

If  the  accused  be  found  guilty,  judgment  shall  be  en- 
tered accordingly,  prescribing  the  punishment,  either  by 
fine  or  imprisonment,  or  both,  in  the  discretion  of  the 
court.  Such  fine  shall  be  paid  to  the  United  States  or  to 
the  complainant  or  other  party  injured  by  the  act  con- 
stituting the  contempt,  or  may,  where  more  than  one  is  so 
damaged,  be  divided  or  apportioned  among  them  as  the 
court  may  direct,  but  in  no  case  shall  the  fine  to  be  paid 
to  the  United  States  exceed,  in  case  the  accused  is  a  nat- 
ural person,  the  sum  of  $1,000,  nor  shall  such  imprison- 
ment exceed  the  term  of  six  months:  Provided,  That  in 
any  case  the  court  or  a  judge  thereof  may,  for  good  cause 
shown,  by  affidavit  or  proof  taken  in  o])en  court  or  before 
such  judge  and  filed  with  the  papers  in  the  case,  dispense 
with  the  rule  to  show  cause,  and  may  issue  an  attachment 
for  the  arrest  of  the  person  charged  with  contempt;  in 
which  event  such  person,  when  arrested,  shall  be  brought 
before  such  court  or  a  judge  thereof  without  unnecessary 
delay  and  shall  be  admitted  to  bail  in  a  reasonable  penalty 
for  his  appearance  to  answer  to  the  charge  or  for  trial  for 
the  contempt;  and  thereafter  the  proceedings  shall  be  the 


The  Clayton  Act  331 

same  as  provided  herein  in  case  the  rule  had  issued  in  the 
first  instance. 

Sec.  23.  That  the  evidence  taken  upon  the  trial  of  any 
persons  so  accused  may  be  preserved  by  bill  of  exceptions, 
and  any  judgment  of  conviction  may  be  reviewed  upon 
writ  of  error  in  all  respects  as  now  provided  by  law  in 
criminal  cases,  and  may  be  affirmed,  reversed,  or  modified 
as  justice  may  require.  Upon  the  granting  of  such  writ  of 
error,  execution  of  judgment  shall  be  stayed,  and  the  ac- 
cused, if  thereby  sentenced  to  imprisonment,  shall  be  ad- 
mitted to  bail  in  such  reasonable  sum  as  may  be  required 
by  the  court,  or  by  any  justice,  or  any  judge  of  any  district 
court  of  the  United  States  or  any  court  of  the  District  of 
Columbia. 

Sec.  24.  That  nothing  herein  contained  shall  be  con- 
strued to  relate  to  contempts  committed  in  the  presence  of 
the  court,  or  so  near  thereto  as  to  obstruct  the  adminis- 
tration of  justice,  nor  to  contempts  committed  in  dis- 
obedience of  any  lawful  writ,  process,  order,  rule,  decree, 
or  command  entered  in  any  suit  or  action  brought  or  prose- 
cuted in  the  name  of,  or  on  behalf  of,  the  United  States, 
but  the  same,  and  all  other  cases  of  contempt  not  specif- 
icallj'^  em})raced  within  section  twenty-one  of  this  Act,  may 
be  punished  in  conformity  to  the  usages  at  law  and  in 
equity  now  prevailing. 

Sec.  25.  That  no  proceeding  for  contempt  shall  be  in- 
stituted against  any  person  unless  begun  within  one  year 
from  the  date  of  the  act  complained  of;  nor  shall  any  such 
proceeding  be  a  bar  to  any  criminal  prosecution  for  the 
same  act  or  acts;  but  nothing  herein  contained  shall  af- 
fect any  proceedings  in  contempt  pending  at  the  time  of 
the  passage  of  this  Act. 

Sec.  26.  If  any  clause,  sentence,  paragraph,  or  part  of 
this  Act  shall,  for  any  reason,  be  adjudged  by  any  court 


332  Appendix 

of  competent  jurisdiction  to  ])e  invalid,  such  judgment 
shall  not  affect,  impair,  or  invalidate  the  remainder  thereof, 
l)ut  shall  be  confined  in  its  operation  to  the  clause,  sen- 
tence, paragraph,  or  part  thereof  directly  involved  in  the 
controversy  in  which  such  judgment  shall  have  been  ren- 
dered. 

Approved,  October  15,  1914. 

THE  FEDERAL  TRADE  COMMISSION  ACT 

[Public — No.  203 — 63d  Congress] 
[H.  R.  15613] 

AN  ACT  To  create  a  Federal  Trade  Commission,  to  define 
its  powers  and  duties,  and  for  other  purposes. 
Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assembled,  That 
a  commission  is  herel)y  created  and  established,  to  be 
known  as  the  Federal  Trade  Commission  (hereinafter 
referred  to  as  the  commission),  which  shall  be  composed 
of  five  commissioners,  who  shall  be  appointed  by  the 
President,  by  and  with  the  advice  and  consent  of  the 
Senate.  Not  more  than  three  of  the  commissioners  shall 
be  members  of  the  same  political  party.  The  first  com- 
missioners appointed  shall  continue  in  office  for  terms  of 
three,  four,  five,  six,  and  seven  years,  respectively,  from 
the  date  of  the  taking  effect  of  this  Act,  the  term  of  each 
to  be  designated  by  the  President,  but  their  successors 
shall  be  appointed  for  terms  of  seven  years,  except  that 
any  person  chosen  to  fill  a  vacancy  shall  l)e  appointed  only 
for  the  unexpired  term  of  the  commissioner  whom  he  shall 
succeed.  The  commission  shall  choose  a  chairman  from 
its  own  membership.  No  commissioner  shall  engage  in  any 
other  business,  vocation,  or  employment.     Any  commis- 


The  Federal  Trade  Commission  Act         333 

sioner  may  be  removed  by  the  President  for  inefficiency, 
neglect  of  duty,  or  malfeasance  in  office.  A  vacancy  in  the 
commission  shall  not  impair  the  right  of  the  remaining 
commissioners  to  exercise  all  the  powers  of  the  commission. 

The  commission  shall  have  an  official  seal,  which  shall 
be  judicially  noticed. 

Sec.  2.  That  each  commissioner  shall  receive  a  salary 
of  $10,000  a  year,  payable  in  the  same  manner  as  the 
salaries  of  the  judges  of  the  courts  of  the  United  States. 
The  commission  shall  appoint  a  secretary,  who  shall  re- 
ceive a  salary  of  $5,000  a  3^ear,  payable  in  like  manner,  and 
it  shall  have  authority  to  employ  and  fix  the  compensation 
of  such  attorneys,  special  experts,  examiners,  clerks,  and 
other  employees  as  it  may  from  time  to  time  find  neces- 
essary  for  the  proper  performance  of  its  duties  and  as 
may  be  from  time  to  time  appropriated  for  by  Congress. 

With  the  exception  of  the  secretary,  a  clerk  to  each  com- 
missioner, the  attorneys,  and  such  special  experts  and 
examiners  as  the  commission  may  from  time  to  time  find 
necessary  for  the  conduct  of  its  work,  all  employees  of  the 
commission  shall  be  a  part  of  the  classified  civil  service, 
and  shall  enter  the  service  under  such  rules  and  regula- 
tions as  may  be  prescribed  by  the  commission  and  by  the 
Civil  Service  Commission. 

All  of  the  expenses  of  the  commission,  including  all 
necessary  expenses  for  transportation  incurred  by  the 
commissioners  or  by  their  employees  under  their  orders,  in 
making  any  investigation,  or  upon  official  business  in  any 
other  places  than  in  the  city  of  Washington,  shall  be  al- 
lowed and  paid  on  the  presentation  of  itemized  vouchers 
therefor  approved  by  the  commission. 

Until  otherwise  provided  by  law,  the  commission  may 
rent  suitable  offices  for  its  use. 

The  Auditor  for  the  State  and  Other  Departments  shall 


334  Appendix 

receive  and  examine  all  accounts  of  expenditures  of  the 
commission. 

Sec.  3.  That  upon  the  organization  of  the  commission 
and  election  of  its  chairman,  the  Bureau  of  Corporations 
and  the  offices  of  Commissioner  and  Deputy  Commis- 
sioner of  Corporations  shall  cease  to  exist;  and  all  pending 
investigations  and  proceedings  of  the  Bureau  of  Corpora- 
tions shall  be  continued  by  the  commission. 

All  clerks  and  employees  of  the  said  bureau  shall  be 
transferred  to  and  become  clerks  and  employees  of  the 
commission  at  their  present  grades  and  salaries.  All 
records,  papers,  and  property  of  the  said  bureau  shall  be- 
come records,  papers,  and  property  of  the  commission,  and 
all  unexpended  funds  and  appropriations  for  the  use  and 
maintenance  of  the  said  bureau,  including  any  allotment 
already  made  to  it  by  the  Secretary  of  Commerce  from  the 
contingent  appropriation  for  the  Department  of  Com- 
merce for  the  fiscal  year  nineteen  hundred  and  fifteen,  or 
from  the  departmental  printing  fund  for  the  fiscal  year 
nineteen  hundred  and  fifteen,  shall  become  funds  and 
appropriations  available  to  be  expended  Ijy  the  commis- 
sion in  the  exercise  of  the  powers,  authority,  and  duties 
conferred  on  it  by  this  Act. 

The  principal  office  of  the  commission  shall  be  in  the 
city  of  Washington,  but  it  may  meet  and  exercise  all  its 
powers  at  any  other  ]ilace.  The  commission  may,  by  one 
or  more  of  its  mem])ers,  or  by  such  examiners  as  it  may 
designate,  prosecute  any  inquiry  necessary  to  its  duties 
in  any  part  of  the  United  States. 

Sec.  4.  That  the  words  defined  in  this  section  shall  have 
the  following  meaning  when  found  in  this  Act,  to  wit: 

"Commerce"  means  commerce  among  the  several 
States  or  with  foreign  nations,  or  in  any  Territory  of  the 
United  States  or  in  the  District  of  Columbia,  or  l^etween 


The  Federal  Trade  Commission  Act         335 

any  such  Territory  and  another,  or  between  any  such 
Territory  and  any  State  or  foreign  nation,  or  between  the 
District  of  Columbia  and  any  State  or  Territory  or  foreign 
nation. 

"Corporation"  means  any  company  or  association  in- 
corporated or  unincorporated,  Avhich  is  organized  to  carry 
on  business  for  profit  and  has  shares  of  capital  or  capital 
stock,  and  any  company  or  association,  incorporated  or 
unincorporated,  without  shares  of  capital  or  capital  stock, 
except  partnerships,  which  is  organized  to  carry  on  busi- 
ness for  its  o\\Ti  profit  or  that  of  its  meml)ers. 

"Documentary  evidence"  means  all  documents,  papers, 
and  correspondence  in  existence  at  and  after  the  passage 
of  this  Act. 

"Acts  to  regulate  commerce"  means  the  Act  entitled 
"An  Act  to  regulate  commerce,"  approved  February  four- 
teenth, eighteen  hundred  and  eighty-seven,  and  all  Acts 
amendatory  thereof  and  supplementary  thereto. 

"Antitrust  acts"  means  the  Act  entitled  "An  Act  to 
protect  trade  and  commerce  against  unlawful  restraints 
and  monopolies,"  approved  July  second,  eighteen  hundred 
and  ninety;  also  the  sections  seventy-three  to  seventy- 
seven,  inclusive,  of  an  Act  entitled  "An  Act  to  reduce 
taxation,  to  provide  revenue  for  the  Government,  and  for 
other  purposes,"  approved  August  twenty-seventh,  eight- 
een hundred  and  ninety-four;  and  also  the  Act  entitled 
"An  Act  to  amend  sections  seventy-three  and  seventy-six 
of  the  Act  of  August  twenty-seventh,  eighteen  hundred 
and  ninety-four,  entitled  'An  Act  to  reduce  taxation,  to 
provide  revenue  for  the  Government,  and  for  other  pur- 
poses,'" approved  February  twelfth,  nineteen  hundred 
and  thirteen. 

Sec.  5.  That  unfair  methods  of  competition  in  com- 
merce are  hereby  declared  unlawful. 


336  Appendix 

The  commission  is  hereby  empowered  and  directed  to 
jirevent  persons,  partnerships,  or  corporations,  except 
])anks,  and  common  carriers  subject  to  the  Acts  to  regulate 
commerce,  from  using  unfair  methods  of  competition  in 
commerce. 

Whenever  the  commission  shall  have  reason  to  believe 
that  any  such  person,  partnership,  or  corporation  has  been 
or  is  using  any  unfair  method  of  competition  in  commerce, 
and  if  it  shall  appear  to  the  commission  that  a  proceeding 
by  it  in  respect  thereof  would  be  to  the  interest  of  the 
public,  it  shall  issue  and  serve  upon  such  person,  partner- 
ship, or  corporation  a  complaint  stating  its  charges  in  that 
respect,  and  containing  a  notice  of  a  hearing  upon  a  day 
and  at  a  place  therein  fixed  at  least  thirty  days  after  the 
service  of  said  complaint.  The  person,  partnership,  or 
corporation  so  complained  of  shall  have  the  right  to  appear 
at  the  place  and  time  so  fixed  and  show  cause  why  an 
order  should  not  he  entered  by  the  commission  requiring 
such  person,  partnership,  or  corporation  to  cease  and  de- 
sist from  the  violation  of  the  law  so  charged  in  said  com- 
plaint. Any  person,  partnership,  or  corporation  may  make 
application,  and  upon  good  cause  shown  may  be  allowed 
by  the  commission,  to  intervene  and  appear  in  said  pro- 
ceeding by  counsel  or  in  person.  The  testimony  in  any 
such  proceeding  shall  be  reduced  to  writing  and  filed  in 
the  office  of  the  commission.  If  upon  such  hearing  the 
commission  shall  be  of  the  opinion  that  the  method  of 
competition  in  question  is  prohibited  by  this  Act,  it  shall 
make  a  report  in  writing  in  which  it  shall  state  its  findings 
as  to  the  facts,  and  shall  issue  and  cause  to  be  served  on 
such  person,  partnership,  or  corporation  an  order  requiring 
su(;h  person,  partnership,  or  corporation  to  cease  and  de- 
sist from  using  such  method  of  competition.  Until  a 
transcript  of  the  record  in  such  hearing  shall  have  been 


The  Federal  Trade  Commission  Act         337 

filed  in  a  circuit  court  of  ajipeals  of  the  United  States,  as 
hereinafter  provided,  the  commission  may  at  any  time, 
upon  such  notice  and  in  such  manner  as  it  shall  deem 
proper,  modify  or  set  aside,  in  Avhole  or  in  part,  any  report 
or  any  order  made  or  issued  l)y  it  under  this  section. 

If  such  person,  partnership,  or  corporation  fails  or  neg- 
lects to  obey  such  order  of  the  commission  while  the  same 
is  in  effect,  the  commission  may  apply  to  the  circuit  court 
of  appeals  of  the  United  States,  within  any  circuit  where 
the  method  of  competition  in  question  was  used  or  where 
such  person,  partnership,  or  corporation  resides  or  carries 
on  business,  for  the  enforcement  of  its  order,  and  shall 
certify  and  file  with  its  application  a  transcript  of  the  en- 
tire record  in  the  proceeding,  including  all  the  testimony 
taken  and  the  report  and  order  of  the  commission.  Upon 
such  filing  of  the  application  and  transcript  the  court  shall 
cause  notice  thereof  to  be  served  upon  such  person,  part- 
nership, or  corporation  and  thereupon  shall  have  juris- 
diction of  the  proceeding  and  of  the  question  determined 
therein,  and  shall  have  power  to  make  and  enter  upon  the 
pleadings,  testimony,  and  proceedings  set  forth  in  such 
transcript  a  decree  affirming,  modifying,  or  setting  aside 
the  order  of  the  commission.  The  findings  of  the  com- 
mission as  to  the  facts,  if  supported  by  testimony,  shall  be 
conclusive.  If  either  party  shall  apply  to  the  court  for 
leave  to  adduce  additional  evidence,  and  shall  show  to  the 
satisfaction  of  the  court  that  such  additional  evidence  is 
material  and  that  there  were  reasonable  grounds  for  the 
failure  to  adduce  such  evidence  in  the  proceeding  before 
the  commission,  the  court  may  order  such  additional 
evidence  to  be  taken  before  the  commission  and  to  be  ad- 
duced upon  the  hearing  in  such  manner  and  upon  such 
terms  and  conditions  as  to  the  court  may  seem  proper. 
The  commission  may  modify  its  findings  as  to  the  facts, 


338  Appendix 

or  make  new  findings,  by  reason  of  the  additional  evidence 
so  taken,  and  it  shall  file  such  modified  or  new  findings, 
which,  if  supported  by  testimony,  shall  be  conclusive,  and 
its  recommendation,  if  any,  for  the  modification  or  setting 
aside  of  its  original  order,  with  the  return  of  such  additional 
evidence.  The  judgment  and  decree  of  the  court  shall  be 
final,  except  that  the  same  shall  be  subject  to  review  by 
the  Supreme  Court  upon  certiorari  as  provided  in  section 
two  hundred  and  fort}^  of  the  Judicial  Code. 
,  Any  party  required  by  such  order  of  the  commission  to 
cease  and  desist  from  using  such  method  of  competition 
may  obtain  a  review  of  such  order  in  said  circuit  court  of 
appeals  by  filing  in  the  court  a  written  petition  prajdng 
that  the  order  of  the  commission  be  set  aside.  A  copy  of 
such  petition  shall  be  forthwith  served  upon  the  commis- 
sion, and  thereupon  the  commission  forthwith  shall  certify 
and  file  in  the  court  a  transcript  of  the  record  as  herein- 
before provided.  Upon  the  filing  of  the  transcript  the 
court  shall  have  the  same  jurisdiction  to  affirm,  set  aside, 
or  modify  the  order  of  the  commission  as  in  the  case  of  an 
application  by  the  commission  for  the  enforcement  of  its 
order,  and  the  findings  of  the  commission  as  to  the  facts, 
if  supported  by  testimony,  shall  in  like  manner  be  con- 
clusive. 

The  jurisdiction  of  the  circuit  court  of  appeals  of  the 
United  States  to  enforce,  set  aside,  or  modify  orders  of  the 
commission  shall  be  exclusive. 

Such  proceedings  in  the  circuit  court  of  appeals  shall  be 
given  precedence  over  other  cases  pending  therein,  and 
shall  be  in  every  way  expedited.  No  order  of  the  commis- 
sion or  judgment  of  the  court  to  enforce  the  same  shall  in 
any  wise  relieve  or  absolve  any  person,  partnership,  or 
corporation  from  any  liability  under  the  antitrust  acts. 

Complaints,  orders,  and  other  processes  of  the  commis- 


The  Federal  Trade  Commission  Act         339 

sion  under  this  section  may  be  served  by  anyone  duly 
authorized  by  the  commission,  either  (a)  by  delivering  a 
copy  thereof  to  the  person  to  be  served,  or  to  a  member  of 
the  partnership  to  be  served,  or  to  the  president,  secretary, 
or  other  executive  officer  or  a  director  of  the  corporation  to 
be  served;  or  (b)  by  leaving  a  copy  thereof  at  the  principal 
office  or  place  of  business  of  such  person,  partnership,  or 
corporation;  or  (c)  by  registering  and  mailing  a  copy 
thereof  addressed  to  such  person,  partnership,  or  corpora- 
tion at  his  or  its  principal  office  or  place  of  business.  The 
verified  return  by  the  person  so  serving  said  complaint, 
order,  or  other  process  setting  forth  the  manner  of  said 
service  shall  be  proof  of  the  same,  and  the  return  post-office 
receipt  for  said  complaint,  order,  or  other  process  regis- 
tered and  mailed  as  aforesaid  shall  be  proof  of  the  service 
of  the  same. 

Sec.  6.  That  the  commission  shall  also  have  power — 

(a)  To  gather  and  compile  information  concerning,  and 
to  investigate  from  time  to  time  the  organization,  business, 
conduct,  practices,  and  management  of  any  corporation 
engaged  in  commerce,  excepting  banks  and  common  car- 
riers subject  to  the  Act  to  regulate  commerce,  and  its  re- 
lation to  other  corporations  and  to  individuals,  associa- 
tions, and  partnerships. 

(b)  To  require,  by  general  or  special  orders,  corporations 
engaged  in  commerce,  excepting  banks,  and  common  car- 
riers subject  to  the  Act  to  regulate  commerce,  or  any  class 
of  them,  or  any  of  them,  respectively,  to  file  with  the 
commission  in  such  form  as  the  commission  may  prescribe 
annual  or  special,  or  both  annual  and  special,  reports  or 
answers  in  writing  to  specific  questions,  furnishing  to  the 
commission  such  information  as  it  may  require  as  to  the 
organization,  business,  conduct,  practices,  management, 
and  relation  to  other  corporations,  partnerships,  and  in- 


340  Appendix 

dividuals  of  the  respective  corporations  filing  such  reports 
or  answers  in  writing.  Such  reports  and  answers  shall 
be  made  under  oath,  or  otherwise,  as  the  commission  may 
prescribe,  and  shall  be  filed  with  the  commission  within 
such  reasonable  period  as  the  commission  may  prescribe, 
unless  additional  time  be  granted  in  any  case  by  the  com- 
mission. 

(c)  Whenever  a  final  decree  has  been  entered  against 
any  defendant  corporation  in  any  suit  brought  by  tlie 
United  States  to  prevent  and  restrain  any  violation  of  the 
antitrust  Acts,  to  make  investigation,  upon  its  oa\ti  in- 
itiative, of  the  manner  in  which  the  decree  has  lieen  or  is 
being  carried  out,  and  upon  the  apj)lication  of  the  Attor- 
ney General  it  shall  be  its  duty  to  make  such  investigation. 
It  shall  transmit  to  the  Attorney  General  a  report  em- 
bodying its  findings  and  recommendations  as  a  result  of 
any  such  investigation,  and  the  report  shall  be  made  pub- 
lic in  the  discretion  of  the  commission. 

(d)  Upon  the  direction  of  the  President  or  either  House 
of  Congress  to  investigate  and  report  the  facts  relating 
to  any  alleged  violations  of  the  antitrust  Acts  by  any  cor- 
poration. 

(e)  Upon  the  application  of  the  Attorney  General  to 
investigate  and  make  recommendations  for  the  readjust- 
ment of  the  business  of  any  corporation  alleged  to  be  violat- 
ing the  antitrust  Acts  in  order  that  the  corporation  may 
thereafter  maintain  its  organization,  management,  and 
conduct  of  business  in  accordance  with  law. 

(f)  To  make  public  from  time  to  time  such  portions  of 
the  information  obtained  by  it  hereunder,  except  trade 
secrets  and  names  of  customers,  as  it  shall  deem  expedient 
in  the  pu])lic  interest;  and  to  make  annual  and  special  re- 
ports to  the  Congress  and  to  submit  th(>rewith  recommen- 
dations for  additional  legislation;  and  to  provide  for  the 


The  Federal  Trade  Commission  Act         341 

liublication  of  its  reports  and  decisions  in  such  form  and 
manner  as  may  be  best  adapted  for  public  information  and 
use. 

(g)  From  time  to  time  to  classify  corporations  and  to 
make  rules  and  regulations  for  the  purpose  of  carrying 
out  the  provisions  of  this  Act. 

(h)  To  investigate,  from  time  to  time,  trade  conditions 
in  and  with  foreign  countries  where  associations,  combina- 
tions, or  practices  of  manufacturers,  merchants,  or  traders, 
or  other  conditions,  may  affect  the  foreign  trade  of  the 
United  States,  and  to  report  to  Congress  thereon,  with 
such  recommendations  as  it  deems  advisable. 

Sec.  7.  That  in  any  suit  in  equity  brought  by  or  under 
the  direction  of  the  Attorney  General  as  provided  in  the 
antitrust  Acts,  the  court  may,  upon  the  conclusion  of  the 
testimony  therein,  if  it  shall  be  then  of  opinion  that  the 
complainant  is  entitled  to  relief,  refer  said  suit  to  the  com- 
mission, as  a  master  in  chancery,  to  ascertain  and  report 
an  appropriate  form  of  decree  therein.  The  commission 
shall  proceed  upon  such  notice  to  the  parties  and  under 
such  rules  of  procedure  as  the  court  may  prescribe,  and 
upon  the  coming  in  of  such  report  such  exceptions  may  be 
filed  and  such  proceedings  had  in  relation  thereto  as  upon 
the  report  of  a  master  in  other  equity  causes,  but  the  court 
may  adopt  or  reject  such  report,  in  whole  or  in  part,  and 
enter  such  decree  as  the  nature  of  the  case  may  in  its  judg- 
ment require. 

Sec.  8.  That  the  several  departments  and  bureaus  of 
the  Government  when  directed  by  the  President  shall  fur- 
nish the  commission,  upon  its  request,  all  records,  papers, 
and  information  in  their  possession  relating  to  any  cor- 
poration subject  to  any  of  the  provisions  of  this  Act,  and 
shall  detail  from  time  to  time  such  officials  and  employees 
to  the  commission  as  he  may  direct. 


342  Appendix 

Sec.  9.  That  for  the  purposes  of  this  Act  the  commis- 
sion, or  its  duly  authorized  agent  or  agents,  shall  at  all 
reasonable  times  have  access  to,  for  the  purpose  of  exam- 
ination, and  the  right  to  copy  any  documentary  evidence 
of  any  corporation  being  investigated  or  proceeded  against; 
and  the  commission  shall  have  power  to  require  by  sub- 
poena the  attendance  and  testimony  of  witnesses  and  the 
production  of  all  such  documentary  evidence  relating  to 
any  matter  under  investigation.  Any  member  of  the 
commission  may  sign  subpoenas,  and  members  and  ex- 
aminers of  the  commission  may  administer  oaths  and 
affirmations,  examine  witnesses,  and  receive  evidence. 

Such  attendance  of  witnesses,  and  the  production  of 
such  documentary  evidence,  may  be  required  from  any 
place  in  the  United  States,  at  any  designated  place  of 
hearing.  And  in  case  of  disobedience  to  a  subpoena  the 
commission  may  invoke  the  aid  of  any  court  of  the  United 
States  in  requiring  the  attendance  and  testimony  of  wit- 
nesses and  the  production  of  documentary  evidence. 

Any  of  the  district  courts  of  the  United  States  within 
the  jurisdiction  of  which  such  inquiry  is  carried  on  may, 
in  case  of  contumacy  or  refusal  to  obey  a  su])poena  issued 
to  any  corporation  or  other  person,  issue  an  order  requiring 
such  corporation  or  other  person  to  appear  before  the  com- 
mission, or  to  produce  documentary  evidence  if  so  or- 
dered, or  to  give  evidence  touching  the  matter  in  question; 
and  any  failure  to  obey  such  order  of  the  court  may  be 
punished  by  such  court  as  a  contempt  thereof. 

Upon  the  application  of  the  Attorney  General  of  the 
United  States,  at  the  request  of  the  commission,  the  dis- 
trict courts  of  the  United  States  shall  have  jurisdiction  to 
issue  writs  of  mandamus  commanding  any  person  or  cor- 
poration to  comply  with  the  provisions  of  this  Act  or  any 
order  of  the  commission  made  in  pursuance  thereof. 


The  Federal  Trade  Commission  Act         343 

The  commission  may  order  testimony  to  be  taken  by 
deposition  in  any  proceeding  or  investigation  pending  un- 
der this  Act  at  any  stage  of  such  proceeding  or  investiga- 
tion. Such  depositions  may  be  taken  before  any  person 
designated  by  the  commission  and  having  power  to  ad- 
minister oaths.  Such  testimony  shall  be  reduced  to  writ- 
ing by  the  person  taking  the  deposition,  or  under  his  di- 
rection, and  shall  then  be  subscribed  by  the  deponent. 
Any  person  may  be  compelled  to  appear  and  depose  and 
to  produce  documentary  evidence  in  the  same  manner  as 
witnesses  may  be  compelled  to  appear  and  testify  and 
produce  documentary  evidence  before  the  commission  as 
hereinbefore  provided. 

Witnesses  summoned  before  the  commission  shall  be 
paid  the  same  fees  and  mileage  that  are  paid  witnesses 
in  the  courts  of  the  United  States,  and  witnesses  whose 
depositions  are  taken  and  the  persons  taking  the  same 
shall  severally  be  entitled  to  the  same  fees  as  are  paid  for 
like  services  in  the  courts  of  the  United  States. 

No  person  shall  be  excused  from  attending  and  testify- 
ing or  from  producing  documentary  evidence  before  the 
commission  or  in  obedience  to  the  subpoena  of  the  commis- 
sion on  the  ground  or  for  the  reason  that  the  testimony  or 
evidence,  documentary  or  otherwise,  required  of  him  may 
tend  to  criminate  him  or  subject  him  to  a  penalty  or  for- 
feiture. But  no  natural  person  shall  be  prosecuted  or  sub- 
jected to  any  penalty  or  forfeiture  for  or  on  account  of 
any  transaction,  matter,  or  thing  concerning  which  he  may 
testify,  or  produce  evidence,  documentary  or  otherwise, 
before  the  commission  in  obedience  to  a  subpoena  issued 
by  it :  Provided,  That  no  natural  person  so  testifying  shall 
be  exempt  from  prosecution  and  punishment  for  perjury 
committed  in  so  testifying. 

Sec.  10.  That  any  person  who  shall  neglect  or  refuse  to 


344  Appendix 

attend  and  testify,  or  to  answer  any  laA\^ul  inquiry,  or  to 
produce  documentary  evidence,  if  in  his  power  to  do  so, 
in  obedience  to  the  subpoena  or  lawful  requirement  of  the 
commission,  shall  be  guilty  of  an  offense  and  upon  con- 
viction thereof  by  a  court  of  competent  jurisdiction  shall 
be  punished  by  a  fine  of  not  less  than  $1,000  nor  more 
than  $5,000,  or  by  imprisonment  for  not  more  than  one 
year,  or  by  both  such  fine  and  imprisonment. 

Any  person  who  shall  willfully  make,  or  cause  to  be 
made,  any  false  entry  or  statement  of  fact  in  any  report 
required  to  be  made  under  this  Act,  or  who  shall  willfully 
make,  or  cause  to  be  made,  any  false  entry  in  any  account, 
record,  or  memorandum  kept  by  any  corporation  subject 
to  this  Act,  or  who  shall  willfully  neglect  or  fail  to  make, 
or  to  cause  to  be  made,  full,  true,  and  correct  entries  in 
such  accounts,  records,  or  memoranda  of  all  facts  and 
transactions  appertaining  to  the  business  of  such  corpora- 
tion, or  who  shall  willfully  remove  out  of  the  jurisdiction 
of  the  United  States,  or  willfully  mutilate,  alter,  or  by 
any  other  means  falsify  any  documentary  evidence  of  such 
corporation,  or  who  shall  willfully  refuse  to  submit  to  the 
commission  or  to  any  of  its  authorized  agents,  for  the 
purpose  of  inspection  and  taking  copies,  any  documentary 
evidence  of  such  corporation  in  his  possession  or  within 
his  control,  shall  be  deemed  guilty  of  an  offense  against 
the  United  States,  and  shall  be  subject,  upon  conviction 
in  any  court  of  the  United  States  of  competent  jurisdic- 
tion, to  a  fine  of  not  less  than  $1,000  nor  more  than 
$5,000,  or  to  imprisonment  for  a  term  of  not  more  than 
three  years,  or  to  both  such  fine  and  imprisonment. 

If  any  corporation  required  by  this  Act  to  file  any  an- 
nual or  special  report  shall  fail  so  to  do  within  the  time 
fixed  by  the  commission  for  filing  the  same,  and  such 
failure  shall  continue  for  thirty  days  after  notice  of  such 


The  Federal  Trade  Commission  Act         345 

default,  the  corporation  shall  forfeit  to  the  United  States 
the  sum  of  $100  for  each  and  every  day  of  the  continuance 
of  such  failure,  which  forfeiture  shall  be  payable  into  the 
Treasury  of  the  United  States,  and  shall  be  recoverable 
in  a  civil  suit  in  the  name  of  the  United  States  brought  in 
the  district  where  the  corporation  has  its  principal  office 
or  in  any  district  in  which  it  shall  do  business.  It  shall 
be  the  duty  of  the  various  district  attorneys,  under  the 
direction  of  the  Attorney  General  of  the  United  States,  to 
prosecute  for  the  recovery  of  forfeitures.  The  costs  and 
expenses  of  such  prosecution  shall  be  paid  out  of  the  ap- 
propriation for  the  expenses  of  the  courts  of  the  United 
States. 

Any  officer  or  employee  of  the  commission  who  shall 
make  public  any  information  obtained  by  the  commission 
without  its  authority,  unless  directed  by  a  court,  shall  be 
deemed  guilty  of  a  misdemeanor,  and,  upon  conviction 
thereof,  shall  be  punished  by  a  fine  not  exceeding  $5,000, 
or  by  imprisonment  not  exceeding  one  year,  or  by  fine  and 
imprisonment,  in  the  discretion  of  the  court. 

Sec.  11.  Nothing  contained  in  this  Act  shall  be  con- 
strued to  prevent  or  interfere  with  the  enforcement  of  the 
provisions  of  the  antitrust  Acts  or  the  Acts  to  regulate 
commerce,  nor  shall  anything  contained  in  the  Act  be 
construed  to  alter,  modify,  or  repeal  the  said  antitrust 
Acts  or  the  Acts  to  regulate  commerce  or  any  part  or  parts 
thereof. 

Approved,  September  26,  1914. 


346  Appendix 


FURTHER  AMENDMENT  OF  WILSON  TARIFF 

ACT 

[Public— No.  370.    Feb.  12,  1913] 
[H.  R.  25002] 

AN  ACT  To  amend  section  seventy-three  and  section 
seventy-six  of  the  Act  of  August  twenty-seventh, 
eighteen  hundred  and  ninety-four,  entitled  "An  Act 
to  reduce  taxation,  to  provide  revenue  for  the  Gov- 
ernment, and  for  other  purposes." 
Be  it  enacted  hy  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assembled,  That 
section  seventy-three  and  section  seventy-six  of  the  Act  of 
August  twenty-seventh,  eighteen  hundred  and  ninety-four, 
entitled  "An  Act  to  reduce  taxation,  to  provide  revenue 
for  the  Government,  and  for  other  purposes,"  be,  and  the 
same  are  hereby,  amended  to  read  as  follows: 

"Sec.  73.  That  every  combination,  conspiracy,  trust, 
agreement,  or  contract  is  hereby  declared  to  be  contrary 
to  public  policy,  illegal,  and  void  when  the  same  is  made 
by  or  between  two  or  more  persons  or  corporations  either 
of  whom,  as  agent  or  principal,  is  engaged  in  importing 
any  article  from  any  foreign  country  into  the  United 
States,  and  when  such  coml)ination,  conspiracy,  trust, 
agreement,  or  contract  is  intended  to  operate  in  restraint 
of  lawful  trade,  or  free  competition  in  lawful  trade  or 
commerce,  or  to  increase  the  market  price  in  any  part  of 
the  United  States  of  any  article  or  articles  imported  or 
intended  to  be  imported  into  the  United  States,  or  of  any 
manufacture  into  which  such  imported  article  enters  or 
is  intended  to  enter.  Every  person  who  is  or  shall  here- 
after l)e  engaged  in  the  importation  of  goods  or  any  com- 


Further  Amendment  of  Wilson  Tariff  Act     347 

modity  from  any  foreign  country  in  violation  of  this  sec- 
tion of  this  Act,  or  who  shall  combine  or  conspire  with 
another  to  violate  the  same,  is  guilty  of  a  misdemeanor, 
and  on  conviction  thereof  in  any  court  of  the  United 
States  such  person  shall  be  fined  in  a  sum  not  less  than  one 
hundred  dollars  and  not  exceeding  five  thousand  dollars, 
and  shall  be  further  punished  by  imprisonment,  in  the 
discretion  of  the  court,  for  a  term  not  less  than  three 
months  nor  exceeding  twelve  months." 

"Sec.  76.  That  any  property  owned  under  any  con- 
tract or  by  any  combination,  or  pursuant  to  any  con- 
spiracy'", and  being  the  subject  thereof,  mentioned  in  sec- 
tion seventy-three  of  this  Act,  imported  into  and  being 
within  the  United  States  or  being  in  the  course  of  trans- 
portation from  one  State  to  another,  or  to  or  from  a  Terri- 
tory or  the  District  of  Columbia,  shall  be  forfeited  to  the 
United  States,  and  may  be  seized  and  condemned  by  like 
proceedings  as  those  provided  by  law  for  the  forfeiture, 
seizure,  and  condemnation  of  property  imported  into  the 
United  States  contrary  to  law." 


INDEX 


ABATEMENT:                                                                              page 
of  evil  denounced  by  the  law 63 

ABNORMAL  METHODS  OR  CONTRACTS: 

may  constitute  undue  restraint 81,  111-112 

ACTION  AT  LAW: 

at  common  law 6 

attorney's  fee 216 

constitutionality  of  section  seven 186 

damages: 

actual  only,  recoverable 206-207 

additional  capital  required 213 

anticipated  profits 208-209 

avoidable  injuries 215 

burden  of  proof  on  plaintifT 207 

enhanced  price  of  commodities 213-214 

entirely  within  state 212-213 

exemplary  or  punitive 211 

extra  clerk  hire 214 

general,  are  recoveraI:)lc 205 

restraint  incomplete 204 

increased  cost  of  doing  business 213 

injury  to  property 214 

.injuries  to  inter  or  intrastate  business 221 

money  spent  getting  ready  to  do  business 212 

mental  intention  to  engage  in  commerce 205 

proximate  and  continuing 206 

reasonable  certainty  required 207-208 

rebates,  effect  of 215 

speculative  and  remote 208 

349 


r350  Index 

ACTION  AT  LAW— cnntinuffl.  page 

declaratory  of  common-law  risht 192-193 

defendant,  single: 

corporation  sole  defendant 190 

examples  of  cases 190 

may  be  sued  separately,  when 161-162,  189 

itself  a  combination 189 

under  section  two 190 

defendants  not  engaged  in  interstate  commerce 191 

delayed  raising  of  defense  in  appellate  court 203-204 

direction  of  verdict 217 

evidence: 

final  judgment  or  decree 217-218,  274 

newspaper  showing  publicity 217 

reasons  for  termination  of  custom 217 

stolen  papers 217 

subsequent  conduct  of  defendant 216-217 

extension  of  scope  by  Clayton  Act 273 

fictitious  action 187-188 

illegal  scheme 204-205 

in  business  within  the  district 188-189 

jury  trial  cannot  be  denied 176 

limitation  of  actions 187 

must  be  complete  at  date  of  suit 193-194 

pending  of  action: 

awaiting  trial  of  government  suit 183 

in  state  court 201-202 

plaintiff: 

intention  and  preparedness  to  engage  in  business 211 

not  engaged  in  interstate  commerce 192 

prevented  from  engaging  in  business 209-210 

pleading: 

allegations  of  conspiracy 200-201 

allegations  of  damage 204-205 

averments  of  jurisdiction 188 

bill  of  particulars 203 

"connected  story"  of  the  facts 19G 

demurrer  as  general  appearance 202 

discret  ion  of  lower  court 203 

essent  ial  averments 199 

examples  of  plaintiff's 201 


Index  351 

ACTION  AT  LA\Y— continued.  page 

full  history  of  facts 198-199 

general  appearance  and  waiver 202 

greater  liberality  than  at  common  law 197 

narrow  and  technical  rules  not  favored 196-197 

need  not  be  labelled 194 

new  problem  in 198 

particularity  of  indictment  not  required 198 

reasonable  certainty 195 

satisfaction  of  defendant 194-195 

scope  of  plaintiff's  allegations 195-196 

scheme  or  combination  as  a  whole 200-201 

state  practice  and  pleading 186-187 

vagueness  and  uncertainty 196 

withdrawal  of  plea  to  file  demurrer 203 

words  of  statute 194 

receiver,  right  to  sue 192 

remedial  not  penal 193 

repression  of  evil  and  advancement  of  remedy 196 

set-off 215 

Rice  V.  Standard  Oil  Co 199-200 

sovereign  state  cannot  be  party  thereto .' 191 

statutory  provisions 186 

stockholder  cannot  sue  for  corporate  injuries 190-191 

"where  defendant  ...  is  found" 188 

AGRICULTURAL  ORGANIZATIONS: 

under  Clayton  Act 274-275 

ANCILLARY: 

restraints  of  trade,  not  prohibited 7,  8,  89 

ANSWER: 

setting  up  anti-trust  law 
see  Defense. 

ANTI-TRUST  LAW: 

fear  of  powerful  combinations 55-56 

first  section  (restraint  of  trade) 54 

second  section  (monopoly) 54 

modes  of  giving  effect 54-55 


352  Index  • 

ANTI-TRX'ST  LAW— mntimwd.  page 

primary  objort  of  statute 55 

text  of  Sherman  Law 209-301 

text  of  Clayton  Act 310-332 

ANY  FORM : 

of  monopoly  prohibited 125-126 

ANY  PART: 

monopoly  of 125 

ANY  PERRON: 

monopolizing  or  attempting  to  monopolize 126 

APPEAL: 

lies  to  Supreme  Court  in  government  equity  suit 127 

statutory  amount  in  controversy 170 

ATTEMPT  TO  MONOPOLIZE: 

all  unlawful  attempts  embraced 127 

by  giving  of  rebates 141 

defined . 124 

direct  or  indirect  effect 127-12S 

essential  to  show  intent 143 

distinguished  from  mere  preparation 127 

scope  of  phrase 122-123 

ATTORNEY'S  FEE: 

in  action  at  law 216 

AUXILL\RY  LINES: 

of  railroads 41,  275 


B 

BANK: 

eligibility  of  officers  of 277 

interlocking  directorates  of 275-276 

BILL  IN  EQUITY: 

see  EcjijiTAULio  Proceedings. 


Index  353 

BLACKLISTIXG:  page 

of  competing  wholesalers 108 

of  employers  and  others 46,  47,  52 

BOND: 

on  preliminary  injunction 169-170,  172,  283-284 

BOYCOTTS: 

as  a  restraint  of  interstate  commerce 45,  47 

BUREAU  OF  CORPORATIONS: 

abolished 288 


CERTIORARI: 

in  matters  of  Federal  Trade  Commission 280,  291-292 

CIRCUIT  COURT: 

abohshed,  and  succeeded  by  District  Court 166 

CIRCUIT  COURT  OF  APPEALS: 

jurisdiction  on  matters  of  Federal  Trade  Commission  279-280, 

291-292 
CLAYTON  ACT: 

commerce  defined 271-272 

competitive  bidding 277 

contempt  proceedings 285-286 

Federal  Trade  Commission: 

additional  evidence 279-280 

complaint 278-279 

precedence  of  proceedings 281 

proceedings  to  enforce  order 279 

liability  under  anti-trust  laws 281 

review  by  federal  courts 280 

service  of  process 281 

eligibility  of  officers  of  corporation 277 

embezzlement  by  officers  of  common  carriers 277 

enforcement  of  provisions 278 

exclusive  use  restrictions 273 

extension  of  scope  of  action  at  law 273 


354  Index 

CLAYTON  ACT^rnnfiJiued.  page 

final  judgment  or  decree  in  government  suits 274 

full  text  of  act 310-332 

in  general 271 

injunctions  and  restraining  orders: 

■  formal  requisites 284 

employers  and  employees 284 

giving  of  security 283-284 

issuance  of  preliminary 283 

labor  disputes 284-285 

interlocking  directorates  and  double  employment 275-277 

invalid  matter 286 

labor,  agricultural  or  horticultural  organizations 274-275 

"person"  or  "persons"  defined 272 

price  discrimination 272 

proceedings  in  equity: 

by  government 282 

by  private  person 282-283 

responsibility  of  officers  of  corporat  ion 282 

statute  of  limitations 274 

stock  ownership 275 

subpoena  for  witness 282 

venue  of  actions: 

against  common  carriers 283 

against  corporations 281 

complaint  of  commission 278-279 

in  action  at  law 273-274 

in  proceeding  in  equity 282,  324-325 

COERCION: 

to  prevent  or  enforce  employment  of  others 47-48,  52 

by  either  laborers  or  capitalists 46,  50 

COKE,  LORD: 

definition  of  monopoly 1 

COMBINATION: 

aggregation  of  properties  by  purchase 94-95 

allegation  of  means 158 

antedating  defendant  corporation 105 

balancing  of  evils  and  benefits 134-135 


Index  355 

COMBINATION— ro/7/i/n/,rr7.  page 

blacklisting  of  competitors 108 

competitive  practices,  when  unlawful 137 

complete  control  unnecessary 110-111,  129 

continuing  offense 105 

created  by  two  or  more  persons 104 

exchange  for  interest  in  amalgamated  plant 95 

exclusive  license  contracts 236,  237 

form  of: 

any  variety  of 126 

changing  investment 95 

embraces  all  old  and  new 80 

is  immaterial 104 

inability  of  competitor  to  supply  market 113 

increasing  of  profits 116 

industrial  changes  brought  about  artificially 117 

innocent  purchaser  of  commodity  of 112 

intent: 

immaterial  in  case  of  necessary  result 146-147 

to  aid  financially  weak,  no  excuse 150 

later  members  thereof 105 

lawful  combination  turned  to  unlawful  purpose 67,  106 

live  stock  exchange 116 

manufacturers: 

agreement  of,  not  affecting  interstate  commerce 118 

private,  where  interstate  commerce  is  restrained 119 

restraining  both  manufacture  and  sale 28-29 

where  part  of  combination 119 

meaning  of  term 103 

necessary  operation  to  restrain  trade 85-86 

one  man  cannot  combine 254 

one  may  do  what  many  cannot 112-113 

organized  or  formed  abroad: 

operating  here  and  affecting  foreign  commerce 106,  107 

operating  abroad  solely 107 

purpose  to  restrain  foreign  commerce  of  U.  S 81-82 

parts  separately  lawful 108 

patents,  independent  owners 234r-236 

prices: 

control  of 67-68,  lOS-109,  118 

continued  purchase  at  enhanced 115-116 


356  Index 

COMBINATION— conti7iiic(i.  page 

power  to  fix 100 

reasonable,  do  not  excuse  illegality 135 

reduction  of,  temporarily 113-114 

public  wrong  constituted  by 8-9 

purpose: 

express,  to  eliminate  competition 110 

presumption  when  illegitimate 110 

solely  for  greater  efficiency 107 

sole,  to  destroy  competition 81 

sole,  to  fix  prices 109-1 10 

reasonable  rates,  maintaining 42 

reasonable  restraint  upon  ruinous  competition 115 

retention  of  each  owner's  interest 94-95 

sale  to  party  thereto 112 

ser\nce,  improvement  of 114 

single  terminal 41 

slock  ownership: 

dominating,  resulting  in  direct  restraint \'l(^ 

extinguishing  competition 39-40,  121 

investment  purposes,  solely 40,  275 

mere  control  by 119 

subsidiary  or  branch  corporations 40,  275 

substantially  lessening  competition 40,  275 

tending  to  create  a  monopoly 40,  275 

trust  defined 103-104 

trust,  in  the  form  of 103 

unreasonable  competition  suppressed 135 

unusual  and  abnornial  methods 111-112 

usual  course  of  business 93 

voluntary  withdrawal 113 

wholly  within  state 106 

COMMERCE: 

sec  Interstate  Commerce. 

COMMISSION  MERCHANTS  OR  AGENTS: 

charges  of 25-26,  32 

COMPETITION: 

covenants  not  to  compete 90-92 


Index  357 

COMVFjTITION— continued.  page 

bidding,  agreements  to  prevent 93 

in  dealings  wit  h  common  carriers 277-278 

blacklisting  to  prevent 108 

comparative  insignificance 41-42 

character  of  service  rendered 41 

evils  less  than  those  of  unification 133 

inability  of  competitor  to  supply  market 113 

legitimate  methods  not  forbidden 65-66 

natural  or  normal: 

efTect  of 132-133 

preventing  play  of 88-89 

the  law  of  trade 133-134 

non-competing  patent  owners 238 

one  person  may  make  exclusive  sales 66-67 

personal  right  to  fix  prices 66 

public  right  to 37-38,  153 

purpose  to  destroy 81 

reasonable  restraint  of,  when  ruinous 115 

restraint  of,  distinguished  from  restraint  of  trade 61-62 

substantiaUy  lessenmg 40,  272,  273,  275 

suppression  of 62,  135 

text  of  contract  not  to  compete 92-93 

undue  restraint  of 60,  61 

unreasonably  restrictive  of  competitive  conditions 61 

CONDITIONS: 

see  Restrictions  and  Conditions,  and  Patent  and  Patent 
Right. 

CONGRESS: 

combinations,  may  prohibit  when 12 

contracts  extinguishing  interstate  competition 15 

exercise  of  powers  may  be  deferred 59 

no  authority  over  intrastate  commerce 13,  29-30 

-power  to  regulate  interstate  commerce: 

complete  in  itself 11 

contracts,  legitimate  regulation  of 15,  16-17 

is  exclusive 56 

not  unhmited 15 

plenary  in  character 11,  12 

right  to  exercise 10,  11 


358  Index 

CONSPIRACY:  page 

act  of  one  is  act  of  all 99 

aiding  in  performance 99 

allegation: 

of  facts  constituting 200-201 

of  means 158 

of  time 159 

requirement  of  certainty 157 

circumstantial  evidence 101 

common  design  is  essence  thereof 96 

continuance  in  time 97,  98 

comers 100-101 

corporation  can  conspire 100 

defined 96 

distinguished  from  contract 98-99 

joining  after  formation  thereof 99-100 

legality  of  dismembered  parts 100 

not  limited  to  contracts  and  combinations 78 

one  person  alone  cannot  conspire 98-99,  161,  254 

order  of  proof 101-102 

other  conspiracies  indirectly  connected 162 

overt  act  unnecessary 97,  159 

parties  not  all  traders 100 

partnership  in  crime 97 

resulting  in  monopoly 161 

single  shipment 34 

steps  constituting  but  one  cause  of  action 200-201 

two  or  more  persons 98-99 

CONSTITUTIONALITY  OF  SHERMAN  LAW: 

as  a  criminal  statute 55,  151 

of  section  seven 186 

CONSTRUCTION: 

all  illegal  means  covered 59-60 

case  must  stand  upon  its  own  facts 180 

comnum  law: 

act  broader  than 62 

interpretation  in  light  of 78 

interpretation  requiring  change  of 78 

standard  of  reason  at 68-69 


Index  359 

CONSTRUCTION— conhnued.  page 

control  of  rates  and  prices 67-68 

debates  in  Congress 57-58 

direct  or  indirect  effect 82-85 

distinction  between  restraint  of  trade  and  restraint  of 

competition 61-62 

first  and  second  sections  of  Sherman  Laiv: 

not  identical  in  scope 71-72 

scope  of,  taken  together 71 

second  section  broader  than  first 72 

second  section  includes  more  than  common-law  restraints  .73 

second  section  supplements  first 72-73 

subject-matter  of  both 71 

effect  upon  both  consumers  and  competitors 65 

general  words  or  expressions 58,  59 

generic  enumeration  of  offenses,  effect  of 63-64 

growing  liberality 53 

historical  environment 57 

impeding  free  flow  of  commerce 64-65 

intent  of  lawmakers 58 

lateness  of  enactment 59 

legitimate  competition  not  forbidden 65-66 

limitation  of  rights  by  act 229 

literal  construction 58 

normal  and  usual  contracts 80-81 

public  welfare  first  consideration 56 

purpose  of  statute 67 

preventing  birth  of  business 209 

reasonable  construction  of  act 68,  84 

repression  of  evil  and  application  of  remedy 63 

rule  of  reason 70-71,  128 

strictness  in  criminal  indictments 53 

surrounding  circumstances 65 

test  of  reasonable  restraint  of  trade 69 

title  of  act 75 

unreasonable  or  undue  restraint: 

materiality  of 70 

of  competition  or  trade 60-61 

of  competitive  conditions 61 

unusual  and  abnormal  methods 111-112 

whole  statute  must  be  taken  together 56 


360  Index 

CONTEMPT:  page 

disobedience  of  court  order 286 

excuse  that  bill  is  demurrable 268 

information  in  contempt  proceedings 267-268 

interference  with  receiver 269-270 

lack  of  jurisdiction 268 

limitation  of  proceeding 286 

presence  of  the  court 286 

prohibition  must  be  clearly  defined 267 

punishment  under  Clayton  Act 270,  285-286 

reasonable  doubt 268-269 

where  also  criminal  offense 285 

writ  of  error  or  appeal 270 

CONTRACT: 

cannot  be  enforced  if  unlawful 219-220 

confidential  communications 142 

competing  railroads 3t) 

different  from  conspiracy 97 

exclusive  sale  agreements 118 

direct  or  immediate  effect 82-83 

general  restraint  of  trade 79 

general  right  of  alienation 88 

instrumentality  of  combination 93 

legality  under  state  law 94 

legitimate  protection  of  covenantee 89 

liberty  of,  not  unlimited  but  subordinate  to  law 16,  17 

made  in  usual  course  of  business 93 

main  jjurpose  to  foster  trade 83 

maintaining  resale  prices 108-109 

necessary  construction  and  effect 85-86 

not  to  bid 93 

not  to  compete,  or  engage  in  same  business 90-92 

not  to  ship  out  of  state 94 

partly  written  and  partly  oral 95 

patents,  right  of  contract  under 242-243 

restraining  patentee's  own  trade 233-234 

preju<licial  to  public  interest 91 

preventing  play  of  competition 88-89 

promotion  of  legitimate  business 89 

protection  of  good  will 92 


Index  361 

CO'^TRACT— continued.  PAGE 

restrninl  of  trade  at  common  law: 

lawful  if  ancillary  to  general  purpose 7,  8 

only  illegal  in  sense  of  being  unenforceable 6 

partial  restraint  generally  valid 5 

test  of  unreasonableness  limited  to  contracting  parties 8 

why  generally  unreasonable 5 

right  to  fix  terms  of  sale 88 

scheme  or  system  of  contracts: 

of  contracts  separately  lawful 140 

of  restrictive  agreements 109 

of  uniform  contracts 138-139,  239 

text  of  covenant  not  to  compete 92-93 

use  of  guarded  language  covering  real  purpose 93-94 

valid  when  made  continues  to  be  valid 94 

COPYRIGHT: 

cannot  be  used  to  cover  illegal  combination 254 

does  not  authorize  violations  of  law 254-255 

no  right  to  control  future  sales 252-253 

one  person  may  acquire  any  number  of 253 

CORNERS: 

may  be  subject  of  conspiracy 100-101 

CORPORATION: 

acquisition  of  stock  of  subsidiary 275 

can  be  party  to  conspiracy 100 

copying  of  evidence  by  Federal  Trade  Commission.  . .  .294-295 

dominated  through  stock  interest 120-121 

eligibility  of  officers 277 

failure  to  file  reports  required  by  commission 296 

formed  subsequent  to  combination 104 

incriminating  matters 265-266 

interference  with  receiver  of 269-270 

interlocking  directorate 276-277 

investigation  under  Federal  Trade  Commission  Act 293 

minority  stockholder  in  action  under  section  seven ....  175-176 

no  right  to  immunity 265-266 

obstructing  trade  by  state  authority 13-14 

responsibility  of  officers 282 


362  Index 

C0RP0RA.T10N— continued  page 

stock  ownership 275 

subject  to  subpffina  duces  tecum 257 

subject  to  Federal  Trade  Commission  Act 288 

venue  of  actions  under  Clayton  Act 280 

when  sole  defendant 189-190 

where  may  be  sued 167 


DAMAGES: 

see  Action  at  Law. 

DEBATES  IN  CONGRESS: 

as  showing  the  historical  environment 57-58 

DEFENSE,  SHERMAN  LAW  AS  A: 

executed  or  executory  contracts 220 

general  iniquitous  conduct 222-223 

good  when  pertinent 219 

inevitable  tendency  to  injure 221 

lateness  of  presentation 226 

lawful  contracts  of  illegal  combinations 223-225 

parties  in  pari  delicto 220 

patent  and  trade-mark  infringements 248-251 

pleading  of: 

fact  appearing  but  not  pleaded  in  defense 226 

must  as  a  general  rule  be  specially  pleaded 225 

protection  of  conspiracy  to  fix  rates 222 

to  common-law  contracts  in  restraint  of  trade 222 

to  enforcement,  of  contract,  part  of  illegal  scheme  .  .  .  .221-222 

of  rebate  agreement 221 

of  unlawful  agreement 219-220 

where  illegality  is  not  involved 223-224 

DEMURRER: 

complicated  count  of  indictment 153 

demurrable  defect  does  not  avoid  injunction 170 

may  constitute  general  appearance 202 

waiver  of  misjoinder 202 

withdrawal  of  plea  to  file 203 


Index  363 

DIRECT  OR  INDIRECT  EFFECT:  page 

of    matters    complained    of    on    interstate    commerce  82-85, 

127-128 

DOMINATING  STOCK  INTEREST: 

as  an  instrumentality 39-40 

E 

EMBEZZLEMENT: 

by  officer  of  common  carrier 277 

EQUITABLE  PROCEEDING  BY  GOVERNMENT: 

appeal  lies  only  to  Supreme  Court 185 

awaiting  criminal  action  not  required 183-184 

case  to  stand  upon  its  own  facts 180 

district  courts  have  jurisdiction 166 

effect  of  voluntary  dissolution 178 

entry  of  decree  on  mandate 184 

equitable  cognizance,  to  be  of 168 

expediting  certificate 184 

injunctLon: 

affecting  labor 182-183 

agreement  not  to  compete 179 

binding  on  whom 182 

defective  bill  does  not  render  void 170 

employers  and  employees 182 

giving  of  security 169-170 

irreparable  injury 169 

issued  by  court  without  jurisdiction 183 

preferable  to  dissolution 181 

preliminary 177-178 

restraining  order 166,  177-178 

threatened  crimes 168-169 

unknown  defendants 181 

may  be  b}'  way  of  petition 166 

modern  construction  of  bill  in  equity 168 

new  problem  in  pleading 198 

nonresident  defendants 167 

numerous  offenders 170-171 

proper  utticers  of  government  to  bring 171 


364  Index 

EQUITABLE  PROCEEDING  BY  GOVERNMENT— co7^^     page 

provisions  of  Clayton  Act 282 

relief: 

continuance  of  acts  in  the  future 179 

determined  by  status  at  date  of  bill 178 

monopoly  and  continuing  monopoly 180-181 

proper  measure  of 179 

purely  administrative  conditions 180 

statutory  amount  in  controversy 170 

where  to  be  instituted 167 

EQUITABLE  PROCEEDING  BY  PRIVATE  PERSON: 

effect  of  final  judgment  and  decree  in  government  suits.  .  .  .  173 

cannot  sue  common  carriers,  when,  etc 172,  283,  325-326 

general  equity  jurisdiction,  when  involving 173-175 

injunction  and  restraining  orders: 

Clayton  Act,  under 182-183,  283-284 

irreparable  injury 169,  283 

security,  giving  of 172,  283-284 

without  notice 177,  283 

minority  stockholder 175-176 

prior  to  Clayton  Act 172-173 

section  seven  of  Sherman  Law  does  not  apply 175-176 

statute  of  limitations 173,  274 

treble  damages  not  recoverable 176-177 

under  Clayton  Act 172,  282-283 

undecided  suits  as  a  cause  of  action 171 

EVIDENCE: 

circumstantial 101 

conduct  of  defendant  after  destruction  of  business  .  .  .  .216-217 
documentary  evidence,  right  of  commission  to  copy.  .  .294-295 

government  suit  on  final  judjziincnt  or  (l(>('n'(' 217-218,  274 

newspaper  r(>{)or(s,  to  show  publicity 217 

as  mat  ter  of  history 121 

official  proclamations,  historically 121 

rea.sons  given  for  cessation  of  custom 217 

stolen  documents  and  i)apers 217 

EXCLUSIVE  LICENSE  CONTRACTS: 

to  effect  combination  under  cover  of  jiatents 236-237 


Index  365 

EXCLUSIVE  SALES:            '  page 

of  one's  own  merchandise 66-67 

EXCLUSIVE  USE  RESTRICTIONS: 

under  Clayton  Act 273 

EXPEDITING  CERTIFICATE: 

in  government  suit  in  equity 184 

text  of  The  Expedition  Act 304^307 

EXPEDITING  OF  PROCEEDINGS: 

under  Federal  Trade  Commission  Act 292 


F 

FACILITIES  FOR  INTERSTATE  COMMERCE: 

charges  for  facilities  furnished 31 

character  of  services  rendered 41 

local  facility  merely 32 

FEDERAL  TRADE  COMMISSION: 

additional  evidence 279-280,  291 

Bureau  of  Corporations  abolished 288 

complaint  for  violation  of  Clayton  Act 278-279 

complaint  of  unfair  method  of  competition 290 

circuit  court  of  appeals  of  U.  S.: 

exclusive  jurisdiction  of 280,  292 

review  of  orders  of  commission 280,  292 

depositions 295 

documentary  evidence,  right  to  copy 294-295 

enforcement: 

of  certain  sections  of  Clayton  Act 278,  293-294 

of  orders  of  commission 291 

interference  with  enforcement  of  other  laws 297 

proceedings  of,  under  Clayton  Act 279 

expediting  proceedings 292 

failure  of  corporation  to  file  reports 296 

false  returns  or  reports 296 

form  of  decree  in  anti-trust  cases 294 


366  Index 

FEDERAL  TRADE  COMMISSION— coN/inwed.  page 

immunity 296 

liability  under  anti-trust  laws,  no  relief  from 281,  292 

mandamus  at  request  of  commission 295 

miscellaneous  powers  of  commission 292-293 

new  regime  in  remedial  legislation 287 

personnel  of  commission 287 

persons  or  concerns  subject  thereto 288 

precedence  relative  to  orders  of  board 281 

principal  office  and  places  of  meeting 288 

refusal  to  testify 296 

review,  by  U.  S.  circuit  court  of  appeals 280,  292 

by  Supreme  Court 280,  291-292 

service  of  complaints,  orders,  etc 281 

testimony  before  and  report  of  commission 290-291 

text  of  Federal  Trade  Commission  Act 332-345 

unfair  methods  of  competition 288-290 

unlawful  publication  by  officer  of  commission 297 

witnesses,  attendance  of 295 

immunity  of 296 

FOREIGN  COMMERCE: 

acts  done  in  foreign  country 23,  107 

every  species  of  commercial  intercourse 21 

navigation 21-22 

only  in  part  in  U.  S 107 

restraint  of,  by  combination  formed  abroad 81-82,  106 

transportation  of  passengers 23,  24 

FORESTALLING,  REGRATING,  AND  ENGROSSING: 

statutes  against 3 


GENERIC  ENUMERATION: 

of  offenses  in  Sherman  Law 63-64 

GENERAL  EQUITY  JURISDICTION: 

in  suits  brought  by  private  persons 173-175 


Index  367 

GOOD  MOTIVES:  page 

cannot  excuse  violations  of  act 114,  149 

GOOD  WILL: 

protection  of,  in  sale  of  a  business 92 

GRAND  JURY: 

inquisitorial  power 151,  269 

proceedings  not  open  to  scrutiny 151-152 

subject  to  control  of  court 151 

GUILTY  KNOWLEDGE: 

in  cases  of  conspiracy 143 

H 

HISTORICAL  ENVIRONMENT: 

in  construing  statutes 57 

interruption  of  interstate  commerce 121 

HOLDING  COMPANY: 

may  be  within  act 120-121,  275 

HORTICULTURAL  ORGANIZATIONS: 

under  Clayton  Act 274-275 

I 

IGNORANCE: 

is  no  defense  or  excuse 150 

IMMUNITY  ACTS: 

breadth  of  present  federal  statutes 265 

defendant  as  witness  for  co-defendant 266 

effect  of  immunity  under  state  statutes 267 

effect  \ipon  state  courts 267 

extends  only  to  natural  persons 262 

federal  immunity  statutes,  substance  of 262 

incrimination  of  witness 261-262 

meaning  of  "proceeding" 264 

must  be  absolute 263 


368  Index 

I]\IM UNITY  ACTS— contmucd.  page 

no  immunity  for  corporation 265-266 

no  necessity  of  claiming 266 

officers  of  a  corporation 265-266 

privilege  of  third  person 265 

purely  a  personal  privilege 265 

purpose  thereof 262 

scope  of  Fifth  Constitutional  Amendment 264 

scope  of  section  860,  Revised  Statutes 263-264 

status  of  law  prior  to  June  30,  1906 262 

sworn  answers  to  bill 266-267 

witness  before  Federal  Trade  Commission 296 

INDICTMENT: 

active  parties  principal  in  misdemeanor 161 

allegations: 

of  illegality,  merely 157 

of  means 158 

under  first  section  of  Sherman  Law 152 

under  second  section  of  Sherman  Law 152,  160-161 

construction  on  appeal 164 

certainty  of  charge 156-157 

conspiracy  resulting  in  monopoly 161 

constitutionality  of  act 151 

corporation: 

liability,  as  defendant 162-163,  272,  301 

of  officers  of 163,  282 

of  stockholders  of 163 

party  to  conspiracy 162-163 

defendant  outside  of  federal  district 162,  164-165 

demurrer,  doubtful  grounds  of 153 

duplicity 159-160 

facts  constituting  offense  must  be  set  forth 156 

formal  defects 154 

grand  jur}-,  power  and  proceedings 151-152 

intent  must  be  combined  with  act 155 

label  of  offense  not  necessary 160 

means  to  accomplish  general  purpose 155-156 

necessary  facts  must  be  set  forth 157 

numerous  documents,  pleading  of 159 

omission  of  essential  elements,  effect  of 158 


Index  369 

IfiDlCTMENT— continued.  page 

one  party  dpfpndant 161 

other  offenses  indirectly  connected 162 

overt  act,  not  necessary  in  conspiracy 159 

proving  of  every  means  alleged  unnecessary 158-159 

reference  to  other  counts 152 

removal  of  defendant  to  another  federal  district 164-165 

single  offense  committed  in  more  than  one  way 159-160 

undue  restraint 153 

unrestricted  competition,  public  no  right  to 153 

verdict,  instruction  of 163 

violence  and  intimidation  as  means 155-156 

words  of  statute,  insufficient 154-155 

INDUSTRIAL  CHANGES: 

hardship  resulting  from 117 

must  not  result  artificially 117 

INJUNCTION: 

against  threatened  crimes 168-169 

against  unknown  defendants 181 

Clayton  Act,  under 182-183,  283-284 

effect  of  technical  defect 170 

formal  requisites 182,  284 

giving  of  security 169-170,  172,  283-284 

in  case  of  irreparable  injury 283 

in  case  of  labor  troubles 182-183 

in  case  of  monopoly  and  continued  monopoly 180 

preferable  to  dissolution 181 

preliminary ^ 177-178 

relative  to  employers  and  employees 284 

restraining  order 166,  177-178 

without  notice 177,  283 

INTERLOCKING  DIRECTORATES: 

prohibited  by  Clayton  Act,  when,  etc 275-277 

INTENT: 

aiding  financially  weak 150 

benefiting  public 149-150 

coexistence  with  dangerous  probability 144 


370  Index 

INTENT— continued.  page 

doubtful  cases 145 

general  allegation,  effect  of 143 

good  motives 149 

guilty  knowledge 143 

ignorance  or  mistake  no  excuse 150 

in  conspiracy 99 

may  make  acta  collectively  offensive 148 

no  willful  purpose  to  violate  act 149 

not  necessary  in  case  of  necessary  result 146-147 

parties  intend  natural  consequences  of  their  acts 147 

presumption  necessary  consequences  are  intended 149 

presumption  of  exercise  of  monopolistic  power 148-149 

purpose  or  motive,  when  immaterial 145 

statement  of  intent  and  act  relied  upon 155 

when  essential 142 

where  result  is  inconceivable 148 

where  there  is  only  a  probability 143-144 

INTERSTATE  COMMERCE: 

after  termination  of  transportation 33 

charges  for  facilities  furnished 31 

"commerce"  as  defined  in  Clayton  Act 19-20 

defined 18-19 

entirety  in  two  or  more  states 22 

immaterial  where  article  is  taxed 34 

includes  both  interstate  trade  and  commerce 18,  21 

includes  every  species  of  commercial  intercourse 21 

includes  purchase,  sale  and  transportation 21 

indirect  external  effect  within  state  upon 30 

intrastate  commerce  not  included 29 

labor  of  a  human  being,  not  an  article  of 274 

leased  machinery 33 

manufacturing  not  included 20-27,  28 

manufacture  and  sale 28-29 

mere  intent  of  manufacturer 27-28 

navigation 21,  22 

negotiation  and  sohcitation  of  orders 24,  25 

not  a  technical  but  a  practical  conception 22-23 

not  important  when  title  passes 33 

passengers  going  abroad,  transportation  of 23-24 


Index  371 

INTERSTATE  COMMKWCE— continued.  page 

railroads  are  instrumentalities  of 35 

sale  and  delivery  within  a  single  state  for  transportation 

without 28 

single  shipment 34 

soUcitors  of  commission  merchants 25,  26,  32 

stock  exchanges 31 

trade  defined 20 

what  may  be  regulated 22 

INTERSTATE  COMMERCE  COMMISSION: 

enforcement  of  anti-trust  laws 278 

redress  from  unreasonable  rates 42-43 

J 

JUDGES: 

constituted  court  under  expedition  act 184,  306-307 

JUDICIAL  DISCRETION: 

of  lower  court  relative  to  pleadings 203 

requiring  civil  to  await  criminal  action 183-184 


KING,  JAMES  I: 

statute  of  monopolies 2 

L 

LABOR  ORGANIZATIONS: 

agreement  not  to  work  in  non-union  shop 48 

blacklisting 47,  52 

ceasing  to  work  at  will  of  union 51 

Clayton  Act,  effect  of 44-45 

compelling  employment  of  union  men 47 

equal  protection  to  labor  and  capital 50 

illegal  combinations  or  conspiracies 271-275 

injunctions 51-52,  284-285 

labor  not  an  article  of  commerce 274 

lawful  and  peaceable  methods 50 


372  Index 

LABOR  ORGANIZATIONS— roN/mued.  page 

not  exempt  from  operation  of  act 45-47 

peaceable  methods  permitted 45-46 

presumption  of  lawful  methods 51 

preventing  running  of  railroad 49-50 

refusal  to  handle  Pullman  cars 49-50 

restrictive  rules 49-50 

threats,  intimidation  and  violence 47,  52 

violence  or  coercion 46,  47 

wanton  injury 48 

LEASE: 

leased  machinery  subject  to  regulation 33 

must  comply  with  Clayton  Act 273 

in  pursuance  of  monopoly 137-138 

LEGITIMATE  BUSINESS: 

promotion  of 89-90 

LIBERTY  OF  CONTRACT: 

limited  by  commerce  clause 16 

right  of  contract  subordinate  to  law 16,  17 

LIMITATIONS  OF  ACTIONS: 

follows  state  law,  except 187 

where  government  suit  has  been  instituted 173,  187,  274 

M 

MANDAMUS: 

under  Federal  Trade  Commission  Act 295 

MANUFACTURING: 

distinct  from  commerce 26-27 

mere  intent  of  manufacturer 27 

part  of  combination  manufacturers 119 

private  manufacturers 119 

production  and  preparation  for  transportation 27 

within  a  state 131-132 

MISTAKE  OF  JUDGMENT: 

is  no  excuse  for  violation  of  act 150 


.     Index  373 

MODES  OF  OIVING  EFFECT:  page 

to  the  anti-trust  law 54-55 

MOGUL  STEAMSHIP  COMPANY  CASE: 

illustrative  of  common  law 6-7 

MONOPOLY: 

abnormal  and  unlawful  methods 81,  111-112 

acquisition  of  dominating  stock  interest 39-40 

aggregtj  t  ion  into  hands  of  a  few 125 

any  form 125-126 

"any  part" 125 

api)lied  to  result 3-4 

balancing  public  injury  and  private  benefit 134—135 

beneficial  to  public  no  excuse 134 

by  any  person 126 

by  fixing  prices 118 

competitive  practices  may  become  abnormal  and  unlawful.  .  137 

complete,  need  not  be 110-111,  128-120 

created  in  modern  sense  when 123-124 

definition 122 

evil  of  unification 140-141 

exclusion  of  others  from  competition 124,  125 

imparting  confidential  communications 142 

lease  in  pursuance  of  monopoly 137-138 

live  stock  exchange 116 

mere  magnitude  of  business 128 

manufacturing 26,  118,  119,  131-132 

modem  doctrine  and  definition 122 

natural  effect  of  competition 132-133 

necessaries  of  life,  not  restricted  to 128 

necessary  result  makes  intent  immaterial 146-147 

necessary  tendency  thereto 129 

normal  competition  the  law  of  trade 133-134 

one  person  may  monopolize 126,  161 

patented  articles 233 

sec  also  Patents. 

police  power  of  state 132 

potential  power,  acquirement  of 130 

predictions  of  ruin  made  by  monopolists 132 

presumption  power  will  bo  exorcised 148-149 


374  Index 

MONOPOLY — continued.  page 

price  discrimination  under  Clayton  Act 272 

royal  grants: 

articles  subject  to  system 2 

distress  and  oppression  thereof 2 

efforts  of  people  for  self  protection 4 

evils  thereof 3 

Lord  Coke's  definition I 

scope  of 1 

rule  of  reason 128 

scheme  or  system: 

constituent  elements  part  of  unlawful  plan 135-137 

contracts  separately  lawful 140 

contracts  uniform  in  character 139-140 

plan  may  make  parts  imlawful 130-131 

scope  of  term 122-123 

sole  object  restraint  of  competition  and  prices 141 

stock  ownership 119,  275 

state  constitution  and  statutes 4 

statute  of  monopolies 1,2 

trade  uninjured,  defense  of 129-130 

two  leading  elements 124-125 

welding  together  of  competing  corporations 126-127 

N 

NATIONAL  HARROW  COMPANY  CASES: 

combination  through  exclusive  license  contracts 236-237 

NAVIGATION: 

may  be  interstate  or  foreign  commerce 21-22,  23-24 

see  Foreign  Commerce  and  Interstate  Commerce. 

NECESSARIES  OF  LIFE: 

apj)lication  of  act  not  limited  thereto 128 

NECESSARY  OPERATION  OR  TENDENCY: 

to  restrain  trade  or  create  monopoly 85-87,  110-111,  129 

NORMAL  AND  USUAL  CONTRACTS: 

not  prohibited  if  incidental  to  lawful  purpose 80-81 


Index  375 

NORMAL  COMPETITION:  page 

the  law  of  trade 133-134 

O 

ONE  PERSON  ONLY: 

cannot  combine  or  conspire 98-99,  161,  254 

can  monopolize 126,  161 

may  be  single  defendant  when 161,  162,  189,  190 

may  do  what  many  cannot 1 12-1 13 

OFFENSES: 

mainly  set  forth  in  sections  one  and  two 53-54 

OVERT  ACT: 

need  not  be  alleged  in  conspiracy 159 

P 

PARTIAL  RESTRAINT: 

generally  vaUd 5 

PATENT  AND  PATENT  RIGHT: 

affirmative  right  to  make,  use  and  sell,  not  given 228 

amalgamation  of  non-competing  patent  owners 238 

assignee  succeeds  to  all  rights  of  inventor 253 

contractual  right  of  patentee: 

coextensive  with  patent  monopoly 246 

limitations  thereof 231 

not  pecuUarly  subject-matter  for  federal  court 242-243 

within  scope  of  general  law 242 

cannot  be  extended  to  create  other  monopoly 230-231 

dual  nature  of  rights  of  inventor 227 

exclusive  license  contracts  effecting  combination 236-237 

includes  merely  right  to  exclude 227 

independent  patent  owners,  combination  of 234-236 

infringement  suits: 

enjoining  of  bringing 250-251 

restriction  to  prevent 248 

Sherman  Law  as  a  defense 248-249,  250-251 

rights  of  patentee  solely  enforceable  by 232 

settlement  of 248 


376  Index 

PATENT  AND  PATENT  RIGHT— contiriucfL  page 

simultaneous  bringing  by  different  parties 252 

interstate  commerce,  patent  rights  in  channels  of 232 

hcense  against  prohibitions  of  law 229 

t>  to  no  poly: 

beyond  term  of  patent 241 

outside  of  patent  not  excused 240,  241,  242 

thing  invented  may  be  monopolized 231 

non-use  of 234 

not  exempted  from  operation  of  Sherman  Law 230 

patented  articles: 

monopoly  of 233 

not  outside  of  anti-trust  laws 233 

restraint  of  trade  of 238 

right  of  purchaser  of 243 

plan  or  scheme  through  agreements  relating  to 239 

police  power  of  state 232 

public  service  corporations 247-248 

purpose  and  scope  of  patent  statute 228-229 

restrictions  and  conditions: 

control  of  future  sales 243-244,  246-247 

exclusive  use  restrictions  under  Claj'ton  Act 273 

general  rule  as  to  use  conditions 245 

reasonable  and  legal  conditions  not  prohibited 244-245 

restraining  patentee's  own  trade 233-234 

to  enhance  value  of  patent 246-247 

screen  or  cover  for  violations  of  law 240 

single  mechanical  evolution 238 

three  grantcnl  rights  embraced 227 

use  for  unlawful  purposi;  not  authorized 229 

violence,  acts  of,  not  sanctioned 240 

PICKETING: 

by  peaceable  means 45-46 

PLEADINGS: 

see  Action  at  Law,  Equitable  Pkoceeding  and  Indictment. 

POLICE  POWER  OF  STATE: 

to  prevent  sale  of  patented  articles 232 

over  monopoli(!s 132 


Index  377 

POTENTIAL  PO\^^R  TO  CONTROL  PRICES:  page 

when  acquired  as  a  result  of  efforts  to  that  end 130 

presumption  of  its  exercise 148-149 

PRICES: 

continued  purchase  when  enhanced 115-116 

damage,  an  element  of 213-214 

discrimination  under  Clayton  Act 272 

effect  of  arbitrarily  fixing 118 

personal  right  to  fix 60 

future  sales,  control  of 108-109,  243-244,  246-247 

power  to  fix 100 

question  of  reasonableness  of 115,   135 

reduction  for  time  being 113-114 

Q 

QUEEN  ELIZABETH: 

monopolies  during  the  reign  of 2 


RAILROAD  TRANSPORTATION: 

acquisition  of  entire  system  of  competitor 40 

applies  to  interstate  railroads 35 

arresting  operation  of  road 49 

auxiliary  and  branch  lines 40,  41 

competing  railroads 36,  37 

dominating  stock  interest 39-40 

embezzlement  of  officers  of  eonmion  carrier 277 

evils  common  to  railroads,  corporations  and  persons 37 

holding  company 120-121 

prevention  of  interstate  transportation 38-39 

public  entitletl  to  free  competition  between  railroads 37-38 

railroad  different  from  other  corporations 36 

railroad  different  from  private  individuals 36-37 

reasonable  and  unreasonable  rates 42-43 

where  effect  is  to  lessen  competition  and  to  create  a  monopoly  40 

REASONABLE  AND  UNREASONABLE  RATES: 

no  right  to  combine  to  maintain  reasonable  rates 42 

redress  not  limited  to  Interstate  C Commerce  Commission   42-43 


378  Index 

REASONABLE  RESTRAINT:                                                    page 
test  of 69 

REBATES: 

as  an  element  of  damage 215 

for  exclusive  trading 141 

to  effect  an  illegal  monopoly 221 

RECEIVER: 

interference  with  is  a  contempt 269-270 

not  to  be  appointed  to  perfect  combination 220 

right  to  sue 192 

REMOVAL: 

of  citizen  to  district  where  indicted 164-165 

RESTRAINT  OF  THIRD  PERSONS  AT  COMMON  LAW: 

by  contract,  always  void  and  unenforceable 8 

RESTRAINT  OF  COMPETITION: 

distinguished  from  restraint  of  trade 61-62 

RESTRAINT  OF  TRADE: 

construction  controlled  by  title  of  act 75 

contract  restriction  must  not  be  too  broad 90-91 

contracts  in,  unenforceable 75-76,  222 

conventional  restraints 89 

general  restraint 79 

indirect,  incidental  or  remote  effect 82-85 

insignificant  restraint 89 

meaning  of  words 74-75 

necessary  operation  and  effect 85-87 

no  affirmative  relief  at  common  law 75-76 

not  to  be  greater  than  pn)te(;tion  requires 91 

on  general  right  of  alienation 88 

public  welfare  must  not  be  involved 91 

restriction  upon  ruinous  competition 115 

scope  of  words 78-79 

to  be  confined  within  proper  bounds 91 

to  be  given  conunon  law  meaning 76-78 

to  substantial  degree Ill 


Index  379 

RESTRAINT  OF  TRADE— continued.  page 

voluntary  and  involuntary  restraints 79-80 

when  not  designed 146-147 

RESTRICTIONS  AND  CONDITIONS: 

as  to  use  of  patented  inventions 244r-245 

cannot  run  with  the  article  sold 9 

competing  or  engaging  in  similar  business 90-92 

enhancing  value  of  thing  sold 9 

exclusive  license  contracts 236-237 

must  not  disable  public  service  corporation 247-248 

not  to  ship  out  of  state 94 

to  prevent  infringement  of  patents 248 

upon  selling  price  of  patented  articles 246-247 

upon  subsequent  sales  of  patented  articles 243-244 

RICE  v.  STANDARD  OIL  CO: 

value  as  a  precedent 199-200 

RULE  OF  REASON: 

as  applied  in  Standard  Oil  Co.  and  American  Tobacco  Co. 

Cases 70-71,  128 

s 

SALE: 

bona  fide  for  cash 95 

directly  connected  with  combination 112 

no  direct  relation  to  combination 112 

where  seller  no  longer  has  interest 94-95 

with  agreement  not  to  engage  in  similar  business 90 

with  covenant  not  to  compete 90,  92 

SET-OFF: 

in  action  at  law ......  215 

SHERMAN  LAW: 

course  through  Congress 10 

power  of  Congress  to  enact 10 

text  of 299-301 


380  Index 

SINGLE  SHIPMENT:                                                                 page 
conspiracy  with  reference  thereto 34 

SINGLE  TERMINAL: 

combination  compelling  use  of 41 

SOVEREIGN  POWER  OR  STATE: 

cannot  be  a  party  to  suit 191 

STATE: 

cannot  legislate  to  obstruct  interstate  commerce 13 

combination  wholly  within 106 

constitutionality  of  state  enactment 14-15 

corporation  cannot  obstruct  trade  by  state  authority ....  13-14 

delivery  within  for  transportation  without 28 

indirect  legislation 32-33 

intrastate  commerce 29-30 

local  practice  to  be  followed 186-187 

manufacturing  monopoly  within 131-132 

police  power  over  monopoly 132 

poUce  power  relative  to  patented  article 232 

purchase  legal  imder  state  law  no  excuse 94 

state  line  through  stock-yards 32 

STATUTE  OF  LIMITATIONS: 

in  private  right  of  action 173,  187 

suspension  of  under  Clayton  Act 173,  274 

STATUTORY  AMOUNT  IN  CONTROVERSY: 

need  not  be  stated  when 170 

STOCK  EXCHANGE,  LIVE: 

when  engaged  in  interstate  cominerce 31 

when  mere  association  for  conduct  of  business 116 

STOCK  OWNERSHIP: 

creating  a  monopoly 275 

dominating  ccnitrol  extinguishing  competition 121 

mere  control  of  corporation 119 

substantially  lessening  competition 275 


Index  381 

SUBPCENA:                                                                                    page 
in  general  in  pnvernmcnt,  suits 256 

SUBPa-:NA  DUCES  TECUM: 

books  and  pajicrs  of  a  private  nature 259 

claim  of  immateriality  by  witness 259 

corporation  subject  to 257 

definitencss  of  description  of  documents  called  for 256-257 

documents  produced  on  call  prove  themselves 260 

general  power  of  equity  court 261 

mere  statement  of  materiality  in  application 257-258 

motion  to  quash 261 

motion  to  produce  on  failure  of  service  of 257 

officers  of  defendant  corporation 260 

persons  subject  to 257 

presence  in  court  of  documents 260 

issues  only  upon  application  and  court  order 256 

reasonable  ground  of  relevancy  in  application 257 

unreasonable  searches  and  seizures 258-259 

SUBPCENA  TO  WITNESS: 

in  suits  brought  by  the  United  States 282 

power  of  Federal  Trade  Commission 295 

refusal  to  testify  before  commission 296 

SUBSIDIARIES  AND  BRANCHES: 

in  regard  to  railroads 41 

under  Clayton  Act 40,  275 

T 

TITLE  OF  SHERMAN  LAW: 

shows  only  unlawful  restraints  were  prohibited 75 

TRADE: 

defined 20 

TRADE-MARKS: 

defense  of  Sherman  Law  on  infringement 225,  250 

TRADE  SECRETS: 

articles  made  under  not  exempt  from  Sherman  Law 255 


.382  Index 

TRADE  SECRETH^continucd.  page 

covenants  concerning 255 

distinguished  from  patents  and  rop\righfs 255 

not  to  be  published  by  Federal  Trade  Commission 293 

TRANSPORTATION: 

see  Interstate  Commerce. 

TRUST: 

definition  adopted  by  Judge  Speer 103-104 


UNDUE  RESTRAINT: 

of  competition  or  course  of  trade 61-61,  153 

UNENFORCEABLE  CONTRACT: 

because  in  violation  of  law 6,  75,  76,  219,  220,  221,  222 

UNFAIR  METHOD  OF  COMPETITION: 

additional  evidence  before  commission 291 

complaint  under  Federal  Trade  Commission  Act 290 

declared  to  be  unlawful 288 

distinguished  from  "unfair  competition" 290 

enforcement  of  order  of  commission 291 

groimds  for  prevention  of  unfair  competition 289 

review  by  U.  S.  circuit  court  of  appeals 292 

review  by  Supreme  Court 291-292 

scope  of  phrase 289-290 

testimony  before  commission  and  th(>ir  report 290-291 

"unfair  competition"  defined 288-289 

UNREASONABLE  OBSTRUCTION : 

right  to  require  unobstructed  course  of  trade 4 


UNREASONABLE  SEARCH  AND  SEIZURE: 

in  case  of  subp(rna  duces  tecum 258-259 

UNREASONABLY       RESTRICTIVE       OF      COMPETITIVE 
CONDITIONS: 
matters  so  restrictive  are  all  classed  as  illegal 61 


Index  383 

UNRESTRICTED  COMPETITION:                                         page 
not  a  mat  ter  of  public  right 153 

UNUSUAL  AND  ABNORMAL  METHODS: 

may  constitute  undue  restraint 81,  111,  112 


VOLUNTARY  RESTRAINTS: 

Early  discouragrmrnt  of  contractual  restraints 4 

Objections  to  such  restraints 4-5 

W 

WORDS  OF  STATUTE: 

not  sufficient  to  declare  in 154^155,  194 


k6qs8 


UC  SOUTHERN  REGIONAL  "-'BRARY  FACIUTY^^  ^ 

AA    001  120  544    0 


